The Retail Real Estate Sector in Riyadh: Ken Research

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The Retail Real Estate Sector in Riyadh Ken
Research
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Changing Landscape of the Real Estate Sector in
Riyadh - Retail Supply Vs Demand The retail
sector in Riyadh has witnessed robust performance
during the review period (2011-2016) despite the
steady increase in gross leasing area. The
primary reason for this trend is because shopping
is considered to be one of the few available
recreational activities in the city, indicating
that the market can support a higher GLA per
capita in the coming years. The volume of retail
that is under construction is much lower than
those projects in the planning process.
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It is essential to note that factors such as
location, neighboring competition, catchment area
and efficiency of mall management must be taken
into consideration before the development of
retail malls. The total retail supply in Riyadh
inclined from million square meters during 2012
to million square meters of gross leasing area
during 2016, registering a CAGR of during the
same period. Conversely, total occupied retail
space inclined to million square meters during
2016 from approximately million square meters
during 2012, achieving a CAGR of during the
same period. Supply-Demand Gap The timely
completion of major retail projects including Al
Qasr Mall and Ethra Mall during 2012-2013 had
resulted in the oversupply of retail space in
this sector. As new brands and retail outlets
entered this sector, retail demand grew faster
than retail supply with occupancy rate inclining
to during 2013 from during 2012.
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While high rental rates (especially in
super-regional malls) had deterred many retail
chains from expanding their outlets, increasing
expansion, renovation and repositioning of
community centers and stand alone stores resulted
in supply gap reducing to thousand Sq M. of
gross leasing area during 2013. Retail Mall
Categories The retail real estate market in
Riyadh comprises of various small and large scale
developmental projects. The retail mall
categories comprise of regional, super regional
and community centers. Super regional and
regional malls accounted for of the overall
retail supply in Riyadh during 2016. These mall
categories have witnessed a high occupancy rate
during the review period as they are equipped
with state of the art facilities and are located
in lucrative commercial and residential areas.
Community centers comprise of standalone retail
outlets, supermarket and hypermarket, and have
accounted for of overall retail supply in the
city during 2016.
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Average Rental Rates The rental rate charged by
mall developers in Riyadh varies across different
mall categories. It is evident that average
rental rates across regional and super regional
mall are much higher in comparison to community
centers and standalone store because of better
location and infrastructure facilities. Within
these regional and super regional malls however,
rental rates differ based on area required,
location within the mall and brand power. The
annual average rental rate across all types of
retail malls and community centers was estimated
to be SAR per Sq M. during 2012. Due to the
poor performing regional malls and abundance of
space across community shopping centers, average
rental rates across these formats have witnessed
downward pressure during 2013.
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Future Retail Demand and Supply The total retail
supply in Riyadh is estimated to incline to
thousand Sq M. of GLA by 2021 from thousand Sq
M. during 2016, registering a CAGR of during
the same period. Conversely, retail demand is
projected to augment from thousand Sq M. during
2016 to thousand Sq M. by 2021, achieving a
CAGR of during the same period. Saudi Vision
2030 with respect to feminization in the retail
sector has targeted women participation in the
workforce to increase from the current 22 to 30
during this period. Increasing female
participation in the retail sector will
positively impact growing number of female owned
businesses coupled with higher income and
spending power.
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Future Supply-Demand Gap The negative decline in
rental rates that occurred in 2016 due to excess
retail supply is expected to continue during 2017
as well causing occupancy rate to marginally
increase as more retailers will look to expand
their business portfolio and open new outlets
across the city. Given the oversupply in the
market, mall developers are expected to delay
large scale projects to ensure average rental
rates do not continue to decline in the future.
The completion of this smart city along with
other malls and community centers coupled with a
stagnant occupancy rate is expected to cause
retail oversupply to reach thousand Sq M. of
gross leasing area during 2019. The improving
business environment and competitive rental rates
are expected to cause occupancy rate to remain
relatively stable during this period. Increasing
retail supply along with a slow conversion rate
is expected to cause retail oversupply to reach
thousand Sq M. of gross leasing area by 2021.
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• Key Topics Covered in the Report
• Ksa Real Estate Market
• Community Center Riyadh Market
• Shopping Centres in Riyadh
• Riyadh Retail Real Estate Market
• Ksa Retail Real Estate Market
• Al Sadhan Malls in Riyadh
• Rental Rates Super Regional Malls Riyadh
• Shopping Malls in Saudi Arabia
• For further reading click on the link below
• https//www.kenresearch.com/manufacturing-and-cons
  truction/real-estate/riyadh-retail-real-estate-mar
  ket/122993-97.html
• Related Reports by Ken Research
• https//www.kenresearch.com/manufacturing-and-cons
  truction/real-estate/qatar-real-estate-market/1121
  82-97.html

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