15 / 16
Al-Mazaya Holdings Weekly Real-
Estate Report points out that although
commercial and residential market
segments are somewhat co-dependent,
it is still the case that the commercial
segment relies on a thriving national
or regional economy, whereas the
residential segment can be supported by
buying interest from overseas. Real estate
that is attractive to overseas investors is
likely be able, from a price perspective,
to withstand local financial shocks or
the ups and downs of domestic demand.
This type of real estate is the preferred
type for investors ahead of construction,
as it presents significantly less risk.
Al-Mazaya Holdings Weekly Real-
Estate Report points out we have seen
declines of some 28 percent in Saudi
Arabia’s real estate market compared
to 2014, the result of several factors,
including: lessened liquidity as a
result of a weakened oil price, buyers
waiting on the sidelines for the market
to bottom out and new regulations,
including the White Lands charge
that impels landowners to develop
previously undeveloped land. As a
result of the Whitel Lands charge, the
market is seeeing increased supply
at a time of depressed demand.
These are interesting times for
Saudi Arabia’s real estate market.
Mazaya Monthly Real Estate Report -
Week 4 - October 2015
15
Al-Mazaya Holdings Weekly Real-
Estate Report believes the commercial
segment of the real estate market
is better able to provide security for
investors than the residential segment
during times of healthy local, regional
and global economic growth. This is
because the trends upon which the
commercial segment relies for sentiment
are more varied and international in
nature than those that influence most
asset classes of the residential sector.
For
example,
recent
high-level
business
cooperations
between
Saudi Arabia and the United States of
America, spanning industries such as
energy, mining, health and financial
markets, have given the commercial
real etstate segment in the kingdom
a considerable fillip. Further good
news for the segment comes in the
form of Saudi government plans to
allow 100 percent foreign ownership
of commercial property in some parts
of the country to foreign businesses,
a move likely to stimulate commercial
activity markedly and bring about
increased foreign direct investment.
Saudi’s large retail sector has
consistently posted returns of some
eight percent or more in recent years,
a figure that will likely bring foreign
players flocking when the market opens
and recently proposed regulations to
safeguard investors are implemented.