Assessment of Masterplans in Riyadh - Outlook to 2023

The report titled "Assessment of Masterplans in Riyadh - Outlook to 2023" provides overview of Riyadh city, factors influencing the Riyadh residential market, supply and demand assessment in Riyadh by segment (apartments, villas and vacant lands), residential supply characteristics in terms of housing, market insight and performance, analysis of sale price determinants, infrastructure develop-ment cost, land price assessment in Riyadh city, construction costs for different class (high class, medium class and low class), typical characteristics of apartments and villas in Riyadh. The report also includes competitive analysis of masterplans in the Riyadh city and key features and characters tics of residential sector in Saudi Arabia. The report concludes with the future outlook, investment opportunities and development trends, future landscape of residential sector in Saudi Arabia along with key expected upcoming masterplans.

Riyadh City Review: Riyadh, the capital city of Saudi Arabia is the headquarters of financial business centers where significant international and Arab conferences and exhibitions are held beside major national festivals and events. It was observed that over 80 mega projects, each worth of atleast USD 1.0 billion are presently underway or planned for completion as per the Saudi Vision 2030 NDP (National Development Plan).

Factors Influencing Riyadh Residential Market: Housing development trends over the past few years in Riyadh indicates that the capital city is growing towards the Northern areas, where the properties have the highest sale prices and experience faster absorption rates. Eastern Riyadh was observed as the most attractive area for middle income households, as it benefits from its connectivity to central Riyadh. Some of the major factors influencing Riyadh residential space include number of land transactions, housing loans and interest rates, urban population, oil price shock, taxation, expat exodus or Saudization, affordability of consumers and increasing number of nuclear families.

Supply and Demand Assessment in Riyadh: The residential space within the capital city showcased a strong potential with the government implementing several key initiatives and reforms such as imposition of white land tax and announcement of large scale housing schemes. The residential market in Riyadh is witnessing a shift towards vertical residential developments which are primarily focused on high-end segment. There has been oversupply in terms of residential units within the country’s real estate sector due to a deceleration in economic growth triggered by the fall in oil prices and lack of affordability among Saudi nationals along with limited access to house financing. Implementation of Saudization policy by the KSA government will make foreign expats move out of the country, therefore increasing the demand-supply gap for residential units in the near future. However, the overall future outlook of Riyadh residential sector is expected to remain positive due to implementation of various urban regeneration initiatives including mixed use communities and investment in infrastructures which are further expected to act as catalysts for sustainable development and a more active residential market. Asir, Makkah and Riyadh were observed as leading cities in terms of largest proportions of used and white (vacant) lands in the KSA as of July 2014 in accordance with the Ministry of Municipality and Rural Affairs.

Residential Supply Characteristics in terms of Housing: Villas have become a popular housing solution for upper-middle class in the KSA, especially in the capital city Riyadh. The average household size of a Saudi national family was noted to be between 5-6 for which villa is a more preferred choice over a 2/3/4 BHK apartment. Mid-size apartment dwellings were also common in Riyadh owing to increasing urbanization. As a result of which, it allowed for an alteration of the family structure as individuals shift from their traditional extended family into nuclear family.

Market Insight and Performance: The residential market in the KSA has seen fundamental changes for instance, the approval of long awaited mortgage law which led to increase in the home financing credit disbursement. The year 2017 ended on a positive note for the country, with the government implementing multiple key initiatives and reforms under the Vision 2030 however, the country’s economy was dragged down by low crude oil prices. The country’s real estate market demand remained subdued in the year 2017 with declining rental rates across all classes coupled with low occupancy levels in the country.

Analysis of Sale Price Determinants: The valuation of a real estate property is dependent on the specifications of material used, layout, design of the property, durability and life cycle of the building. Also, quality and cost of materials used during construction, size, current rates of labor, frontage and other physical attributes such as roof covering, height of the building, type of foundation, waterproofing and base and others affect the price of a particular property. Land prices, construction cost and developer margins tend to be leading sale price determinants of a residential property.

Infrastructure Development Cost: Infrastructural development is one of the most significant factors which influence the real estate property prices in the capital city of Riyadh. The presence of commercial offices, industrial warehouses, hotels, shopping malls, multi-storey car park, roads, airports, flyovers, bus terminals and other facilities in the vicinity of property helps value escalation of the property. The shift towards mega and structured shopping malls has been the result of tenants wanting to benefit from the higher footfall and integrated spaces along with a shift in consumer shopping experience towards leisure and entertainment.

Land Price Assessment in Riyadh City: Northern, Central and Eastern side of Riyadh have shown high demand potential in terms of attractive land pricing and availability of land. Residents have started to prefer these newer districts owing to access to quality roads and physical infra-structure, better environment, amenities, services and facilities therefore, offering modern day lifestyle among others. The expansion towards western parts was observed to be limited majorly due to high presence of valleys whereas, in Southern Riyadh, wider presence of industrial area has limited the growth of residential space within this region.

Construction Cost for Different Classes by Residential Asset in Riyadh: The cost of construction was observed to be high in the case of high asset class villa, high-rise apartments and A class residential compound owing to the presence of increasing number of facilities available in that property, followed by further types.

Competitive Analysis of Masterplans in Riyadh: Majority of the masterplans in Riyadh were observed in their developing phase however, the competition scenario is anticipated to change in the near future along with the expected entry of new players in the country’s residential market. Some of major masterplans operating in Riyadh (Eastern region) include Al Shroog masterplan, Loa’loat Al sharg masterplan; Al Rimal masterplan, Modon Al Sharg masterplan, Bawabat Al Sharg (Al Muzaini Real Estate - East Gate) masterplan, Al Ma’ali masterplan and Al Qadisiya masterplan. Masterplans compete on the basis of various parameters including land area, target segment, residential as well as commercial plot area, building height; land price and others. Modon Al Sharg and Al Rimal (western) are two of the leading masterplans in Riyadh in terms of land area.

Riyadh Residential Market Future Outlook: Despite facing difficulties over the past 2 years, the residential market in the KSA is expected to maintain an overall positive outlook due to the multiple reforms that are being presently planned and executed by the Saudi Arabian government. The most prominent of these reforms are included within Saudi Vision 2030 and the National Transformation Program. These reforms over the long term aim at overcoming the multiple obstacles that are being faced by the residential sector such as the high land prices and the imbalance between demand and supply. Emergence of residential compounds has been gaining popularity amongst tenants. These complexes are in line with Grade B compounds and also offer apartment units, limited facilities and other basic amenities. Some of the key expected upcoming masterplans in the KSA include King Abdullah Financial District (KAFD), Red Sea Project, NEOM city, Jeddah Tower, Al Widyan, The City of Tomorrow and others.

Key Topics Covered in the Report

• Executive Summary
• Research Methodology
• Riyadh City Review
• Factors Influencing Riyadh Residential Market
• Supply and Demand Assessment in Riyadh by Segment (Apartment, Villas and Vacant Lands), 2016-2023E
• Residential Supply Characteristics in terms of Housing
• Market Insight and Performance
• Analysis of Sale Price Determinants
• Infrastructure Development Cost
• Land’s Prices Comparison in Eastern Side of Riyadh City
• Land’s Price Assessment in Riyadh City (North, South, East, West of the City)
• Construction Costs for Different Classes (Low / Mid / High-End) by Residential Asset Type 
  (Villa, Apartment and Residential Compound) in Riyadh, 2018
• Typical Characteristics of Apartments in Riyadh
• Typical Characteristics of Villas in Riyadh
• Riyadh Residential Market Outlook, Opportunities and Future Development Trends
• Key Expected Upcoming Masterplans in the Saudi Arabia
• Common Big Masterplans Characteristics in Riyadh
• Does the Landscape of Residential Sector in Saudi Arabia is forecasted to be Positive and 
  encouraging to invest in this Sector?
• Key Features and Characteristics of Residential Sector in Saudi Arabia
• Competitive Analysis of Case Studies