CBRE - Saudi Arabia Real Estate, Q2 2023

The Saudi Arabia Real Estate Market Review for Q2 2023 provides an overview of the real estate sector in Saudi Arabia. The report highlights that the real estate sector in Saudi Arabia has continued its positive momentum. Occupier demand from international and government entities continued to be prevalent in Riyadh, whereas demand in Dammam, Khobar and Jeddah remained lackluster in comparison. The Grade A segment of these respective markets seems to continue to be very much landlord-favoured. The total number of residential transactions fell by 38.1% in the year to June 2023, whilst the total value of these transactions, which reached SAR 26.8bn, fell by 30.4% over the same period. The report also provides a macroeconomic overview of Saudi Arabia, highlighting that the non-oil sector has remained robust, with a forecasted GDP growth rate of 1.1% and a decline in unemployment rate to 5.1%. At the start of 2023, Saudi Arabia's GDP was forecast to grow by 2.5%. However, due to multiple oil output production cuts and lower oil prices, the latest forecasts from Oxford Economics expect Saudi Arabia's GDP growth rate to now reach 1.1% by year end. The report also notes that the robustness of the non-oil sector can be seen in Saudi Arabia's Purchasing Managers Index (PMI), where in June 2023 its reading reached 59.6, up from 58.6 a month earlier according to S&P Global. This increase in the headline index has been underpinned by output and new orders expanding at their fastest levels in roughly eight and nine years respectively, on the back of strong levels of both domestic and foreign demand.