LONDON: Riyadh recorded a 250 percent jump in mortgages last year as the value and number of property deals surged in the Saudi capital.
The volume of real estate transactions rose by 53 percent in 2019 compared to a year earlier while the value of transactions was up 63 percent according to a report from broker CBRE.
“The recent economic and social initiatives and legislation introduced by the Saudi Government have already had an extremely positive impact on the country’s real estate sector,” said Simon Townsend, head of strategic advisory at CBRE MENAT. “We are already starting to witness impressive growth across major real estate segments including residential, hospitality and retail, and this upwards trajectory is likely to continue in the short to medium term.”
Ongoing economic reforms under the Vision 2030 initiative have encouraged investment into the real estate sector while spending on major infrastructure projects such as the Riyadh Metro and tourism developments on the Red Sea coast have helped to boost confidence despite oversupply concerns.
“Overall, the country is making great leaps in its efforts to become a global business hub and world-class tourism destination, and the market is expected to continue to react positively to the efforts of the public and private sectors alike,” added Townsend.
Residential mortgages for individuals in the Kingdom recorded a growth rate of more than 250 percent in terms of the number of contracts signed from January 2019 — November 2019, according to the CBRE data. The value of contracts rose by more than 160 percent in the same period year-on-year.
In October 2019, the Ministry of Housing launched an initiative to support residential renovations by providing financing for residential units more than 15 years old which is expected to result in higher activity among existing aging stock within the central districts of Riyadh.
Beneficiaries of the Saudi Ministry of Housing’s ‘Sakani’ initiative aimed at increasing the national rate of home ownership, grew by about 14 percent in 2019.
At the end of last year, the capital’s residential supply stood at 1,290,000 residential units with an expected delivery of 111,000 additional units by 2023, CBRE said.
Hotel occupancy is also on the rise in the capital and is expected to receive a further boost from Saudi Arabia hosting the G20 summit this year.
The opening of Qiddiya entertainment giga project which is scheduled for 2023 is also expected to benefit the tourism sector.
There are currently about 17,700 hotel rooms in Riyadh with another 4,500 expected to enter the market by 2023. Hotel occupancy has risen by 5 percent year-on-year, CBRE said.