Riyadh hospitality sector to see surge ahead of the G20 summit
CBRE’s recent data predicts growth in residential, office market, retail and entertainment sectors, in addition to real estate
The Saudi Arabian capital Riyadh has reportedly experienced growth in 2019 across hospitality, residential, and retail sectors, as indicated by global real estate consultancy firm CBRE’s recent data release.
The data confirmed an increase in the capital’s hotel occupancy in 2019 and predicted growth in 2020, which will be supported by growing tourism and fueled by key events such as the G20 Summit, to be held in the capital on 21 November, as well as gigaprojects such as Qiddiya, which is scheduled for a 2023 launch.
The boost in Riyadh’s hospitality sector in the last quarter of 2019 was due to Riyadh Season, a three-month mega event which witnessed over 11.4 million tourists, according to CBRE’s market data. In addition, the report revealed a 5% occupancy increase year-on-year.
In the residential sector, there has been an increase in the volume and value of transactions within the Saudi capital by 53% and 63% respectively year-on-year, as demonstrated by the data.
Riyadh achieved a 250% growth rate in residential mortgage offerings in terms of the number of contracts signed in 2019, between January to November. Figures also demonstrate that the value of contracts increased by more than 160% in the same period year-on-year.
Government initiatives such as the the Ministry of Housing’s 'Sakani' initiative – which is aimed at increasing the national rate of home ownership – contributed towards growth in the sector.
As of the end of 2019, Riyadh’s residential supply stood at 1,290,000 residential units with an expected delivery of 111,000 additional units by 2023.
In addition, the global office market industry is receiving an uplift with an increase in co-working and flexible office working structures, CBRE’s data revealed.
The capital's large-scale project, King Abdullah Financial District (KAFD) is expected to be integral to the upgradation of the capital’s office market. KAFD will host a number of Grade A office towers and is aimed at cementing the district as a local, regional and global financial hub.
Total office stock in Saudi Arabia’s capital stood at 4.3 million sq m of gross leasable area (GLA) in the last quarter of 2019 with an additional 1.66 million sq m GLA to be delivered by 2023.
CBRE’s report predicts a renewed growth in the entertainment and F&B sectors in Riyadh’s retail sector, with an increased focus on ‘Shoppertainment’; more than 350 cinemas are expected to open across the country by 2030.
Commenting on the market’s growth across hospitality, residential, and retail sectors, head of strategic advisory at CBRE MENAT and general manager, CBRE KSA, Simon Townsend, said: “The growth across major real estate segments is a result of the increased government spending on large-scale infrastructure and mega projects, which is expected to have a positive effect on other complementary sectors.
"The upward trajectory is likely to continue in the short to medium term. Although performance remains soft, and oversupply remains a challenge, the support from the government and private entities alike indicate the positive direction that the real estate market is moving in.”