High-rise buildings are proliferating in the Kingdom’s major cities. (AN photo)
By ARAB NEWS
Published: Mar 27, 2011 20:23 Updated: Mar 27, 2011 21:54
JEDDAH: Jones Lang LaSalle (JLL), a global real estate investment and advisory firm, on Sunday released its “Top Trends for 2011” shaping Saudi Arabia’s real estate in the coming year and beyond.
Soraka Al-Khatib, its co-head for Saudi Arabia, Jeddah Office, said: “Recent initiatives outlined in the stimulus package, illustrate the strong leadership role of the government, which will act as a catalyst for real estate. Importantly, these initiatives offer an excellent opportunity to achieve critical social goals, like job growth and community building.”
Greater integration across the Kingdom through civil projects and infrastructure investment will promote economic stability, job growth and ultimately benefit the real estate markets in Saudi Arabia, JLL added.
It said progress in the real estate sector parallels the long-term growth potential for the Kingdom’s economy.
JLL said new demand drivers, like the improvement of transportation systems and infrastructure projects, will create investment opportunities and increase the connectivity and attractiveness of the market.
This is compounded by the regional political situation elsewhere within the MENA region where real estate markets are currently facing challenges. The Kingdom’s relative stability, combined with the strong long-term fundamentals, solidifies its role as a strategic commercial location in the region.”
According to its key predictions, the Kingdom’s announcement of the largest budget ever at SR580 billion for 2011, will stimulate construction activity and increase supply. While there may be short-term inflationary pressures, in the long-term these investments will create jobs, increase the standard of living and can improve the social fabric through community building.
John Harris, its co-head for Saudi Arabia, Riyadh Office, said: “Citizens in the Kingdom have a better opportunity to own their homes than in the past, due to the recent guidance and directives of Custodian of the Two Holy Mosques King Abdullah to build 500,000 housing units in various regions of the Kingdom. The existing shortage of affordable housing will decrease significantly, while the large scale initiatives provide an excellent opportunity for holistic community building.”
The survey emphasizes that government leadership is a catalyst for real estate. The stimulus package and leadership initiatives provided by the government will have a direct and indirect impact across real estate sectors. Directly stimulus will be provided to the residential sector through large scale residential plans from initiatives like the General Housing Authority (500,000 units), National Guard (17,000 units), and GOSI (691 units).
The survey says infrastructure is critical for realizing real estate objectives.
Investment in a world-class transport infrastructure will create investment opportunities and underpin demand for real estate across the Kingdom. Major long-term investments in infrastructure and transport for airports, ports and railway improve the competitive advantage, attract investment, and enable connectivity within the Kingdom, but also connectivity to the region with KSA as the core.
Property Management will differentiate the winners from the losers. Long-term capital values will be directly determined by the quality of property and facility management. With many sectors experiencing a significant increase in supply, the new high value assets will require a higher quality property management to maximize revenues, manage costs, and minimize depreciation.