RIYADH: Shopping malls and lifestyle spaces expansions are set to boost Riyadh’s retail area by 28 percent to 4.6 million sq. m. by 2026, a new analysis showed.
In its latest report, global real estate consultancy Knight Frank noted that the total existing retail supply in the Saudi capital stands at 3.6 million sq. m., with around 27,050 sq. m. of space entering the market in the first half of this year.
The retail sector’s growth is crucial for Saudi Arabia’s goal to become a global tourism hub, with the Kingdom’s Minister of Municipal and Rural Affairs Majed Al-Hogail earlier this year noting its 23 percent contribution to the non-oil economy, aiming to surpass SR460 billion ($122.65 billion) by 2024.
Faisal Durrani, head of research for the Middle East and North Africa at Knight Frank, said: “Looking ahead, a further 100,000 sq. m. of space is likely to be completed in the capital this year, which while welcome news for consumers, shines a light on the importance for mall operators, developers and retailers to double-down on experiential retail offerings in order to stay relevant and appealing.”
He described Saudi Arabia’s retail sector development as “phenomenal,” emphasizing its role in boosting the Kingdom’s non-oil gross domestic product growth.
“The rapidity of the evolution of the retail and food and beverage landscape in Saudi Arabia cannot be overstated and Riyadh sits at the heart of this phenomenal growth, which is also powering the Kingdom’s economic diversification efforts,” he said.
Durrani added: “We are in the midst of a significant liberalization of Saudi Arabia’s entertainment sector as well, resulting in the development of new cinemas, concert halls, theme parks, and sports complexes, facilities. This transformation is reshaping the retail landscape while also making a substantial contribution to non-oil GDP growth.”
The report noted that the average rental rates across Riyadh’s retail market increased by 3 percent to SR2,725 per sq. m. in the last 12 months.
Moreover, occupancy rates in the capital city’s retail market grew by 5 percentage points to 90 percent during the same period, propelled by the growth of tourism.
In contrast, the report highlighted that Jeddah and the Dammam Metropolitan Area experienced subdued retail market growth in the last 12 months, with occupancy rates dropping by 1 percentage point in both cities to 84 percent and 89 percent, respectively.
Knight Frank revealed that average rents in Jeddah dropped by 7 percent to SR2,465 per sq. m., while rental rates in Dammam declined to SR2,275 per sq. m.
