Saudi high-rise segment seeing significant supply growth – report

Rising incomes and changing lifestyles are driving significant supply growth in Saudi Arabia’s high-rise segment, according to a new report.

Real estate company Colliers International, the report author, said that developers had shifted their focus over the past five years from traditional high-rise towers to projects focused on modern, luxury towers.

Iconic developments like the under construction Kingdom Tower, set to be the world’s tallest when completed in 2018, and towers with branded hotels are leading the trend, the firm said.

Kingdom Tower is expected play a similar role in driving interest in the surrounding area as Dubai’s Burj Khalifa in the Downtown area, the company said.

Other prime locations adding new supply include the nearby Jeddah Corniche, Riyadh and the tri-city area of Damman, Khobar and Dhahran.

Colliers said the buyers for these properties are a mixture of owner-occupiers – who demand apartments of three bedrooms or more – and investors and second homebuyers seeking smaller builds.

In Jeddah, up to 60 per cent of buyers are expected to be owner-occupiers, with a higher number of investors in Riyadh.

“While there is clearly a fundamental change occurring in this market segment, developers need to pay close attention to demand characteristics,” said Colliers International Saudi Arabia MD Imad Damrah.

“Those developers with a strong reputation of delivery and partnership with iconic brands and commitment to luxury design, fittings and finishes will be best positioned to capitalise on the market opportunity.”

The firm also warned that, similarly to Dubai, the focus on modern luxury meant that there was a growing gap for ‘affordable luxury’ developments in the country.

‘We see a clear gap appearing in the mid-market segment which is showing signs of undersupply given the overall shift in the market,” Damrah added.