Riyadh – Mubasher: Saudi Arabia’s resilient residential mortgage market is expected to maintain momentum following the recent move by the Saudi government to exempt property deals from 15% value-added tax (VAT) and instead impose a new 5% tax on transactions, JLL’s third-quarter (Q3) KSA real estate market performance report found.
The government has also scrapped the tax from first-time home-buyers of properties worth up to SAR 1 million, a move predicted to encourage first time home buyers and support the Vision 2030 goal of raising homeownership to 60% by the end of 2020 and 70% by the end of 2030.
“In addition to the positivity injected by the recent government measures, the residential sector also showed strong construction activity in Q3 2020 with around 10,000 units handed over in Riyadh and Jeddah. This brings the total residential supply to 1.3 million and 834,000 in Riyadh and Jeddah, respectively,” said Head of Research for JLL MENA, Dana Salbak.
Moving forward, the kingdom’s residential rental rates are likely to remain under pressure in the short-to-medium term, due to wider macroeconomic factors such as the rise in unemployment rates and consequent decline in household incomes, Salbak revealed.
The office sector continued to see downward pressure across the Gulf nation, with Riyadh, the commercial hub, continuing to perform better.
The highest number of office space deliveries throughout 2020 was seen during Q3-20, with four projects added to the office stock in Riyadh, bringing the total supply of office gross leasable area (GLA) to 4.4 million square meters.
Moreover, the retail market saw mall operators and owners continue to retain their tenants and maintain their quarterly average rental rates through incentives. In the short term, it is forecasted to remain under pressure as more supply enters the market.
Meanwhile, the Saudi hospitality market is predicted to witness improved infrastructure and an increase in the number of hotel rooms and construction activity, in light of the agreement between the Tourism Development Fund and local banks to finance SAR 160 billion of tourism projects, the report concluded.
