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RIYADH: Saudi Arabia’s commercial real estate sector is witnessing an upturn as the Kingdom’s plan to diversify its economy continues to drive demand within the overall property market, according to a new report from the Royal Institution of Chartered Surveyors. 

This comes as solid market conditions in the Middle East and Africa region continue to defy the broader global macro narrative, according to the firm’s Global Commercial Property Monitor.

The RICS report said that occupier and investor demand is reportedly rising across all sectors, with expectations for rental and capital value growth remain firmly positive, led by particularly upbeat feedback in Saudi Arabia, the UAE and Nigeria. 

The report found that 81 percent of respondents based in Saudi Arabia believe that the market is in an upturn as the Kingdom is currently experiencing a boom within the real estate sector driven by infrastructure, housing and entertainment. 

According to the report, the overall commercial property occupier demand growth was a touch down to 43 percent from the 60 percent posted in the third quarter. But it added that this figure matched the 43 percent posted in the fourth quarter of 2021, demonstrating a stable rate of strong growth over the past year. 

“Like much of the MEA region, the firm trend is visible in all parts of the market in Saudi Arabia where the results for the office sector remain more positive than for the retail and industrial sectors,” said the RICS report.  

Saudi Arabia’s office sector reported a reading of 59 percent, down a touch from the 64 percent reported in the third quarter, the report said. It added that retail and industrial still posted strong growth readings with 32 percent and 38 percent, respectively. 

The RICS report showed that international investment demand has gathered impetus in each of the last three quarters, with all sectors seeing an uptick during this stretch. Leading the way, it said Saudi Arabia attracted strong growth in foreign buyer interest over the fourth quarter, posting a net balance of 49 percent. 

Overall, the findings of the report pointed out that the Saudi Arabian commercial property market, much like its neighbor the UAE, has firm foundations for future growth, even if it becomes caught in the tailwinds of the global economic downturn. 

The report further added that the UAE’s commercial property market also remains strong despite global challenges as around two-thirds of respondents feel the market is on the rise. It added that tenant demand growth in the UAE accelerated within all sectors of the market during the fourth quarter of 2022. 

The outlook for the UAE’s commercial real estate market remains positive as 12-month capital value expectations continue to rise, said the RICS report, adding that foreign investment demonstrates growing confidence in the market with further growth.