Residential rents across the Saudi cities of Riyadh and Jeddah increased during the first quarter of the year, as demand continues to outpace supply.
Average villa rents rose by eight per cent in Riyadh in Q1 2013 compared to the same quarter last year, with a four bed villa rate now standing at around SAR118,700 per annum, stated the latest market by real estate consultancy Jones Lang LaSalle (JLL).
Apartment rents in the city grew at a lower rate than villas, up six per cent in the year to Q1 2013 and now stand at approximately SAR 31,000 per annum for an average two-bed unit.
Both villa and apartment rents are expected to increase further in 2013, said JLL.
Sale prices in the Kingdom’s capital have also increased – average villa prices rose two per cent in Q1 to SAR 4,250 per sq m, while the asking price for new apartments increased four per cent to SAR 2,915 per sq m.
“Supply continues to trail demand. Land prices in peripheral areas have continues to increase, although we perceive less speculative pressure than last year,” stated the report.
Villas outperformed apartments in Jeddah with increases in both rents and sale prices during Q1 2013.
Villa rents increased by four per cent in the Northern regions of Jeddah in Q1 2013 reaching an average of SAR 112,000 per annum, while rates rose by around three per cent in the West to SAR 186,000.
Apartment lease rates remained stable during Q1 2013, but are expected to increase further throughout 2013 due to higher demand from expatriates.
Sale prices for villas increased in the Western and Northern regions of the coastal city, while apartment prices remained relatively unchanged at SAR 4,150 per sq m.
“Demand for apartments is currently higher than that for villas in Jeddah, which is keeping average prices stable,” said JLL.
John Harris, co-head of JLL in the Kingdom said: “All across Saudi Arabia, demand for housing is being supported by increased levels of credit, employment, assistance and confidence.
“Demand is also strong across the office, retail and hotel sectors in Riyadh and Jeddah, but with distinct demand drivers and unique risks for developers and investors in each city.”