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Investments in Saudi Arabia’s industrial real estate sector jumped 281% due to strong demand for warehousing from e-commerce players, according to Knight Frank.

In the first half of 2021, the sector saw the value of investments reach 20.5 billion riyals ($ 5.467 billion), while the number of jobs created reached 30,000, the real estate company said.

The boom in online shopping during the pandemic has helped boost occupancy levels and prices in the market, said Faisal Durrani, partner – head of Middle East research.

In Riyadh, rental prices rose 7% in the first half of the year compared to the same period last year, while Jeddah saw 4.5% year-on-year growth.

“While the government’s economic initiatives have been a catalyst for the growth of the industrial sector, the pandemic has played an equally important role,” Durrani said.

With the shift to online shopping, he said the demand for modern dispensing facilities has also increased.

“We do not expect a drop in online shopping and indeed the government expects the sector’s revenues to reach 30 billion riyals this year, compared to 24.7 billion riyals in 2020.”

Durrani said occupancy rates were 92% in Riyadh and 87% in Jeddah, both up 2% from the previous year. Prime rents rose nearly 8% while Category B rents fell 3.5%, he added.

Knight Frank said developers now only build more inventory when demand is confirmed, which limits new supply, whereas previously warehousing and logistics facilities were built on a speculative basis.

“The scarcity of blue chip supplies, combined with the change in attitude of developers towards speculative development, means that we may be on the verge of creating a vibrant institutional investment market, provided adequate international regulations are also in place. developed, ”Durrani said.

(Written by Imogen Lillywhite; edited by Cleofe Maceda)

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Disclaimer: This article is provided for informational purposes only. The Content does not provide any tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer here.

© ZAWYA 2021

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