'Improved business confidence' Drivees Saudi’s Realty Recovery
In 2020, when the pandemic hit the world, many sectors reported business slowdown leading up to major losses. For the real estate sector too the period wasn't too comforting. However, since the pandemic the sector has witnessed signs of recovery. In the region, Saudi Arabia reported an overall improvement in business activity, according to Knight Frank's Q1 2021 Saudi Arabia Real Estate Market Review. This improvement has been in turn driving an improving outlook for the Kingdom’s real estate market. Faisal Durrani, Head of Middle East Research at Knight Frank, explained: “Like other global economies, the pandemic has driven a widespread economic slowdown across the Kingdom, however improved business confidence during the closing months of 2020, underpin by economic reforms linked to Vision 2030 and the rapid response to COVID-19 has helped to drive a turnaround in performance in all main segments of the real estate market.” According to Knight Frank, Saudi Arabia's decision to exempt real estate transactions from a 15% VAT charge has helped to boost activity in the residential market. Durrani said: “The overall improvement in business confidence and market sentiment has led to a surge in residential mortgage loans, which rose by 38% in the 12-months to the end of February, which has in turn materialised in the form of a marked increase in residential transactions across the country, with Riyadh and Jeddah experiencing a 25% and 34% increase in deal numbers over the last 12 months. "Despite this, the Kingdom’s three main centres have experienced diverging performance in values for apartments and villas." In Riyadh apartment values increased by 4.4%, 6.5% in Jeddah, and 3.2% in Dammam Metropolitan Area. Villas on the other hand witnessed prices decline. In Riyadh, average villa prices fell by 1.6% to SAR 3,750/m2. In Jeddah, villa sales prices fell by 6.3% to a little over SAR5,000/m2, while in villa sales prices fell by 6.3% to SAR5,023/m2, while in the Dammam Metropolitan Area (DMA) villa values declined by almost 8% during Q1 reaching at around SAR3,250/m2.
Tags : INTERNATIONAL Real Estate Knight Frank Saudi Arabia recovery Improved business confidence Saudi Arabia Real Estate Market Review