Abu Riyadh Dh Real Estate Overview Q Riyadh

Transcription

1 Abu Riyadh Dh Real Estate Overview Q Riyadh

2 Market Milestones Q Economic News The tourism sector has seen continued growth with the Saudi Commission for Tourism and Antiquities (SCTA) estimating tourism contributed 7.2% to total GDP in Retail point of sales have grown rapidly in the first quarter of 2012, increasing by 38% Y-o-Y to April This reflects the continued impact of public sector bonuses awarded in Net income of listed companies has increased by 15% Y-o-Y. Transport, Hotels and Insurance sectors recorded the strongest growth. Real GDP is expected to grow by 5.1% in Oil revenues will boost the Kingdom s budgetary position in Inflation increased to 5.4% Y-o-Y higher than its average during Q Escalation in rents and food & beverages were the major contributors to this increase. Bank lending to the building and construction sector has increased by 26% on a Y-o-Y basis. Real Estate financing to end users is also growing rapidly, up by 31% Y-o-Y to April

3 Market Milestones Q Property & Project News Kingdom Holding Company is to begin work on a new mega residential city: Kingdom Oasis, located east of Riyadh on Dammam Highway. Construction continues on the King Abdullah Financial District (KAFD), the new financial centre for Riyadh. The King is scheduled to formally inaugurate the project towards the end of this year, after which the first tenants will be able to take occupation. Al Argan has unveiled the design and layout for a new 1,000 apartment complex as part of its Manazil Cordoba project. Dar Al Arkan has sold 1.8 million sq m of land in its Shams Ar- Riyadh project to the north of Riyadh to SABIC for a total value of SAR 742 million. This land will be used to construct housing for SABIC employees. According to the General Authority of Civil Aviation, work on the expansion of King Khalid International Airport (KKIA) is expected to begin in November this year. Capacity of KKIA is expected to triple within next three years. Riyadh authorities have launched a tender process to develop a new metro transit system in the capital which will be part of Riyadh Public Transport Plan that was announced on 17 th of May. Six different metro lines have been announced with a total length of 181 km. 3

4 Riyadh Prime Rental Clock Q Hotel* Rental Growth Slowing Rents Falling Rental Growth Accelerating Rents Bottoming Out Residential Office *Hotel clock reflects the movement of RevPAR. Retail Source: Jones Lang LaSalle Note: This diagram illustrates where Jones Lang LaSalle estimate each prime market is within its individual rental cycle as at end of relevant quarter. 4

5 Riyadh Hotel Market Overview Ritz Carlton Hotel

6 Number of Rooms Hotel Supply Following the significant increase in supply in 2011 (1,200 rooms) there were no additions to the supply of hotel rooms in the Riyadh market in the first quarter, with stock remaining at 7,100 rooms. The Ritz Carlton is now fully operational following its soft opening in This was the last completed hotel, adding 493 rooms to the luxury sector of the market. Approximately 1,250 additional rooms are expected to be opened by the end of 2012, increasing the current supply by nearly 17%. The new supply for 2012 includes internationally branded properties ranging from budget to upscale level. These include the Ibis Olaya, Hilton Garden Inn Al Muroj, Holiday Inn Meydan Olaya, Hyatt Regency Plaza Olaya and the Courtyard by Marriott Olaya. The Marriott Executive Apartments is expected to open in Q2 2012, increasing the quality supply in the serviced apartment market. The InterContinental Hotel Group recently announced two properties in the city s King Abdullah Financial District, with a second InterContinental in Riyadh and the first Indigo hotel in the Middle East. Hilton has also recently announced its fourth property in Riyadh, to be constructed on King Fahd Road for completion in Riyadh Hotel Supply ( ) 14,000 12,000 1,350 10,000 2,350 8,000 1,250 6,000 10,700 4,000 8,350 7,100 2, F 2013F 2014F Current Supply Future Additions Source: Jones Lang LaSalle Hotels 6

7 Major Existing & Future Hotels 1 Four Seasons Hotel 2 Faisaliyah Hotel 3 Novotel Hotel Ritz Carlton Hotel 5 InterContinental Hotel Sheraton Hotel 1 Kempinski Hotel 2 Crown Plaza Hotel 3 Indigo Hotel 4 Hilton Hotel 5 Fairmont Hotel Existing Future 6 Nobu Hotel 7 Hyatt Regency

8 ADR (USD) Occupancy Hotel Performance The Riyadh hotel market has witnessed a softening in performance over the first quarter of 2012 as arrival figures have failed to keep pace with the significant increase in supply recorded in Riyadh Hotel Performance (YT April ) Occupancy levels declined to 64% over the first 4 months (YT April), down from the 71% achieved over the same period in Average Daily Rates (ADR) also declined marginally (down to USD 270) in the YT April, reversing the increase witnessed during Falling occupancies and room rates resulted in RevPAR declining (13%) from USD 198 in the first four months of 2011 to USD 173 during YT April The current softening is expected to be short term, with the longer term prospects for the Riyadh market looking very healthy as the Saudi Government is spending increased amounts to promote more visitors to the Capital YTApril 2009 YTApril 2010 YTApril 2011 YTApril 2012 YTApril ADR(USD) Occupancy(%) Source: STR Global 8

9 Hotel Market Summary Indicator Level Comment / Outlook Current Hotel Supply 7,100 rooms The hospitality landscape of Riyadh is evolving. 1,200 rooms were added in 2011, mainly in the internationally branded segment. No additional projects completed in Q Future Supply ( ) 4,950 rooms Supply entering the market 2012 will include the Ibis Olaya, Hilton Garden Inn Al Muroj, Holiday Inn Meydan Olaya, Crowne Plaza Olaya and the Courtyard by Marriott Olaya (YT April) Occupancy 64% Decline in YTD levels of occupancy, reversing the positive trend in (YT April) ADR USD 270 The increase in supply in 2011 has placed downward pressure on average rates. RevPAR also contracted (by 13%) over the first four months of 2012 compared to the same period in

10 Contacts: Chiheb Ben-Mahmoud Executive Vice President, Hotels Follow us on: COPYRIGHT JONES LANG LASALLE IP, INC This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.