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Mazaya Monthly Real Estate Report -
Week 4 - October 2016
Though land sales accounted for the
lion’s share of real estate transactions,
residential land prices fell by 19%
against 2015’s and by 32% against
2014’s. The report added that the market
would witness more developments and
cycles in terms of liquidity, sales and
prices over the coming period, should
supply, demand and sales of lands and
real estate property continue to grow.
Al Mazaya Holding’s report indicated
that the Saudi real estate market
showed signs of weakness due to the
sharp drop in the value of real estate
transactions over the past period of
the current year. The total value of
real estate transactions plummeted
by 23% over the past 10 months to
as low as SR 246 billion compared to
SR 319 billion at the same period last
year. Residential property transactions
fell by 20% while commercial property
rose by 6% at the same period,
with land transactions leading the
sector with 83% of the total value of
all real estate sector transactions.
The report referred to the discrepancy
in liquidity levels in the Saudi realty
market, where land sales are on the
rise, while villas’ prices fell by 30%,
attributing this decline to the fact
that property services differ from
one location to another. This decline
triggered pressures on real estate
activities, leading property purchases
to fall to an all-time low as buyers could
get lower prices with higher advantages
and, at the same time, owners tend
to sell to avoid potential losses.
The report said the change in Saudi
government’s expenditure priorities in
light of the Saudi Vision 2030 is likely to
trigger a state of uncertainty that would
lead investors to shy away from the real
estate business due to the challenges they
encounter, particularly falling land prices
and reducing liquidity at a sector that used
to boast 45% of the total liquidity available
forallinvestmentplatformsintheKingdom.