Arab News, Tuesday, Jun 22, 2021 | Zul Qaadah 11, 1442
Apartment living, e-commerce centers the key trends as Saudi real estate rebounds from 2020
Saudi Arabia: The COVID-19
pandemic has impacted the Saudi property market in many ways, with a number of
trends emerging, such as a focus on apartment living, the growth of e-commerce
impacting the warehouse and retail sector and the reopening of international
movement spurring a rebound in the hospitality sector.
In its new report, real estate consultancy firm CBRE observed that in the
residential sector there has been “increased demand witnessed across major
markets for smaller residential typologies, with increased focus on community
living environment. Developers are responding by introducing a greater
proportion of apartments and townhouses within their mega projects.”
As part of its Vision 2030 program, the government is aiming to increase
homeownership in the Kingdom to 70 percent, up from about 47 percent in 2017.
One of the ways it is doing this is through the launch of Roshn, which is owned
by the Public Investment Fund (PIF). Roshn is planning to start off-plan sales
at its flagship project in Riyadh later this year, with the handover of the
first homes to tenants likely in early 2022.
“Our communities are entirely inclusive, with homes to suit all tastes and
budgets. Our aim is to provide a modern, aspirational living experience while
giving residents the freedom to interpret what this means to them in their own
unique way. Our communities have been designed to inspire a strong sense of
neighborly spirit and genuine connection between residents,” Roshn’s Group CEO
David Grover told Arab News.
CBRE said that millennials were emerging as a key consumer class for residential
units and demand is high for “digitally enabled homes.”
Within the office sector, the report believed that the recent announcement of
the Riyadh Strategy 2030, which aims to attract hundreds of companies to set up
their headquarters in the Saudi capital, will benefit developers building office
space. While the pandemic saw workers staying at home, CBRE believed that
“physical offices are here to stay” but developers may need to move away from
traditional models and offer more flexible spaces to accommodate hybrid working
plans.
Within the retail sector, the surge in e-commerce in 2020 has led to the
development of more fulfilment sectors, warehouses and collection points. “Rapid
growth of online shopping is likely to result in more omni-channel retail,
however, preserving the ‘physical experience’ will be a critical component of
these omnichannel strategies, particularly in the KSA,” the CBRE report
observed.
This was echoed by Ahmad BinDawood, CEO of BinDawood Holding, one of the
Kingdom’s biggest supermarket operators, who told Arab News in May that while
the company had seen a spike in online sales, he believed consumers still prefer
to come to the stores to buy their produce.
“The primary way that the customer prefers to shop is actually visiting the
stores, not through online. Online shopping is still going to be good for the
future but so far we see that the customer prefers to shop in stores to have
that experiential element when they come,” he said.
However, other retailers are adopting a more hybrid model. Dubai’s Majid Al
Futtaim operates 21 Carrefour stores across nine Saudi cities and is aiming to
double its store network by 2025. It saw online sales in the Kingdom rise by 285
percent last year, therefore, alongside the store network expansion, it is also
adding fulfilment centers and boosting door-to-door delivery.
Hani Weiss, CEO of Majid Al Futtaim Retail, told Arab News: “This included
opening a large online fulfilment center in Riyadh and activating nine of our
customer stores to also fulfil online orders. The opening of our automated
fulfilment center in Jeddah is the latest in Majid Al Futtaim’s digital
transformation of its Carrefour operations.”
The 9,000 square meter center in Riyadh is Majid Al Futtaim’s largest for its
online Carrefour business and operates 24 hours a day, seven days a week,
handling up to 5,000 orders a day.
Within the hotel sector, CBRE believed the recovery may take more time as
borders only reopened on May 17. While there was little impact on the guest
experience, CBRE believed that hoteliers did have to reduce costs and salaries,
but these were coming back. Jochem-Jan Sleiffer, president of Hilton Middle
East, Africa and Turkey, told Arab News that while the company is aiming to
increase its presence in the Kingdom from 15 properties to 56 by 2025, the last
year was tough. The company postponed some investment deals to preserve cash and
it did make some layoffs, but it is now back rehiring staff at an accelerated
rate.