Riyadh rents increase as population growth outpaces available homes
Annual rents in Saudi Arabia’s capital Riyadh have risen to an average of26,935 Saudi riyals (Dh26,377) as the city’s population has grown far quicker than the number of new homes built.
According to property broker Chestertons, which has opened its first offices in Saudi Arabia with Saudi partner Medad Valuation International, part of conglomerate Najeeb Abdullatif Alissa Holding Company, only 500,000 new homes have been built in Riyadh over the past 15 years.
At the same time the city’s population has grown by 52 per cent to stand at 6.5 million people.
According to Chestertons, the most expensive area in Riyadh was the exclusive Al Waha district where average annual rents stand at 70,000 riyals.
The district of Jarir was the least expensive in central Riyadh at 35,000 riyals, although cheaper rents can be found in southern Riyadh in the Badr district, where they stand at 18,000 riyals a year.
Average rental rates for villas in Riyadh stood at 118, 668 riyals. Villas in the city centre districts Al Wahah, Al Muruj, Al Sulimaniyah, Al Wurud and Al Olaya all fetched an average of 250,000 riyals a year.
Chestertons said that the average sales price for an apartment in Riyadh stood at 441,656 riyals. Al Wahah was again the most expensive district, where prices stood at 900,000 riyals. Badr, Al Marwah and Al Qadisiyah were the cheapest areas at 250,000 riyals.
Despite a raft of new legislation aimed at making housing more affordable for ordinary Saudis, experts predict that the shortage is likely to worsen in the short term as budget cuts caused by the low oil price force the government to scale back its affordable housing programme.
“The Saudi government is all too aware of the acute shortage in low-cost housing units, but continuing low oil prices have resulted in inevitable cuts in public spending, which has in turn hit public housing projects,” said Declan McNaughton, managing director UAE, Chestertons Mena.
“So far the impact on rental rates has been minimal, but it is beginning to drive prices higher in some areas that have traditionally provided value-led accommodation for budget-conscious tenants,” he added.
Brokers say 400,000 “affordable homes” would be required to satisfy demand from middle-income households earning between 6,000 riyals and 20,000 riyals a month – two-thirds of the population.
Follow The National’s Business section on Twitter
Published: September 5, 2016 04:00 AM