The Kingdom of Saudi Arabia will need around 1 million new homes over the next five years to keep up with an estimated 3.3 per cent compound annual growth rate (CAGR) in demand, according to a study by Saudi-based Jiwar Real Estate Management & Marketing, a leading real estate company in the Gulf region and the marketing arm of the Saudi Bin Laden Group. This pace translates to around 5.5 million required units by 2014.
The residential sector has grown substantially to account for 70 per cent of the Kingdom of Saudi Arabia’s real estate market. Housing demand has risen steadily over the recent years due mainly to a young and rapidly growing population constantly seeking affordable homes. The other 30 per cent is distributed among offices, retail outlets, hospitality and industrial sectors.
The study also revealed that the short- to medium-term domestic residential outlook is very positive as demand is expected to surpass supply by 50,000 units annually over the next four to five years. The Saudi residential sector, which encompasses villas, apartments, duplexes, traditional houses, and residential compounds, is geographically divided into three main local regions; the Central Region (Riyadh), the Eastern Province (Al Khobar, Dammam and Dhahran) and the Western Region (Jeddah, Makkah and Madinah).
“Saudi Arabia continues to be one of the few property markets in the region capable of sustaining growth within the global recession. The residential segment has been the main driver; average occupancy within the six major city markets is in fact at around 96 per cent. While Jiwar will help sustain the momentum of the residential business by focusing on quality and expedient delivery, we will also push signature developments to emphasize the diversity of available property options in the Kingdom,” said Dr. Saleh Bin Abdullah Al Habib, CEO, Jiwar Real Estate Management & Marketing.
Jiwar is actively involved in the Abraj Al-Bait Towers being developed by the Saudi Bin Laden Group in Mecca. Upon completion, the 595m-high structure will occupy a floor area of 1.5 million sqm and become the world’s tallest and largest hotel. It will equal the area of the current record holder, Terminal 3 at the Dubai International Airport in the United Arab Emirates, and surpass the Rose Tower in Dubai as the world’s tallest hotel. Currently the second tallest building being constructed, the Tower will oversee the revered Kaaba in Mecca.
The cities of Riyadh, Jeddah, Mecca, Madina, Damma and Al Khobar are the top residential markets in Saudi Arabia. The property business in these areas is dominated by rented units, which account for an average of 83 per cent of housing. The number of households in Riyadh City alone is expected to rise to around 1.05 million by 2014, representing a CAGR of 3.7 per cent. Jiwar will continue to monitor key market trends to reinforce the Kingdom’s strong reputation as a residential, lifestyle and religious tourism market.