Riyadh and Jeddah witnessed a slowdown in the real estate markets in 2016’s second quarter, according to a report by Jones Lang LaSalle (JLL), as reported by Arabian Business.
The declines were more pronounced in rentals and property sales in the Saudi capital, while Jeddah has also witnessed a noted decline during the quarter.
Several projects in Jeddah have been postponed , despite efforts to address the deficiency of affordable budget housing, according to the Saudi Daily Record.
Reports have explained that the slow demand in growth is a result of continuing falls in residential transactions, with sales down to 5% this quarter.
The report also added that Riyadh is blocked for an increase of housing supply, which results in over 1 million units as a total stock of residential units , while supply remains at a standstill in Jeddah compared to last quarter’s report. It also stated that increasing the loan-to-value ratio from 70% to 85% will spur demand for residential sales.
Jamil Ghaznawi, country head of JLL Saudi Arabia, stated that even though the residential sales might be spurred a bit, due to the White Land Tax that was previously introduced in June, it is expected that the future development of the pipeline will decrease land and housing costs in 2017 and 2018.
Ghaznawi also added that the instability in oil prices has led to a decrease in corporate demand and government spending, which has come with a drawback in the hotel sector in Riyadh.