The total retail supply in Riyadh is estimated to incline to ~ thousand Sq M of GLA by 2021 from ~ thousand Sq M during 2016, registering a CAGR of ~% during the same period.

1. The Retail Real Estate Sector in Riyadh:
Ken Research

2. Changing Landscape of the Real Estate Sector in Riyadh - Retail Supply Vs
Demand
The retail sector in Riyadh has witnessed robust performance during the
review period (2011-2016) despite the steady increase in gross leasing area.
The primary reason for this trend is because shopping is considered to be
one of the few available recreational activities in the city, indicating that the
market can support a higher GLA per capita in the coming years. The
volume of retail that is under construction is much lower than those
projects in the planning process.

3. It is essential to note that factors such as location, neighboring
competition, catchment area and efficiency of mall management must
be taken into consideration before the development of retail malls.
The total retail supply in Riyadh inclined from ~ million square meters
during 2012 to ~ million square meters of gross leasing area during 2016,
registering a CAGR of~% during the same period. Conversely, total
occupied retail space inclined to ~ million square meters during 2016
from approximately ~ million square meters during 2012, achieving a
CAGR of ~% during the same period.
Supply-Demand Gap
The timely completion of major retail projects including Al Qasr Mall and
Ethra Mall during 2012-2013 had resulted in the oversupply of retail
space in this sector. As new brands and retail outlets entered this sector,
retail demand grew faster than retail supply with occupancy rate
inclining to ~% during 2013 from ~% during 2012.

4. While high rental rates (especially in super-regional malls) had deterred
many retail chains from expanding their outlets, increasing expansion,
renovation and repositioning of community centers and stand alone
stores resulted in supply gap reducing to ~ thousand Sq M. of gross leasing
area during 2013.
Retail Mall Categories
The retail real estate market in Riyadh comprises of various small and
large scale developmental projects. The retail mall categories comprise of
regional, super regional and community centers.
Super regional and regional malls accounted for ~% of the overall retail
supply in Riyadh during 2016. These mall categories have witnessed a high
occupancy rate during the review period as they are equipped with state
of the art facilities and are located in lucrative commercial and residential
areas. Community centers comprise of standalone retail outlets,
supermarket and hypermarket, and have accounted for ~% of overall retail
supply in the city during 2016.

5. Average Rental Rates
The rental rate charged by mall developers in Riyadh varies across
different mall categories. It is evident that average rental rates across
regional and super regional mall are much higher in comparison to
community centers and standalone store because of better location
and infrastructure facilities. Within these regional and super regional
malls however, rental rates differ based on area required, location
within the mall and brand power.
The annual average rental rate across all types of retail malls and
community centers was estimated to be SAR ~ per Sq M. during
2012. Due to the poor performing regional malls and abundance of
space across community shopping centers, average rental rates
across these formats have witnessed downward pressure during
2013.

6. Future Retail Demand and Supply
The total retail supply in Riyadh is estimated to incline to ~ thousand
Sq M. of GLA by 2021 from ~ thousand Sq M. during 2016,
registering a CAGR of ~% during the same period. Conversely, retail
demand is projected to augment from ~ thousand Sq M. during 2016
to ~ thousand Sq M. by 2021, achieving a CAGR of ~% during the
same period.
Saudi Vision 2030 with respect to feminization in the retail sector has
targeted women participation in the workforce to increase from the
current 22% to 30% during this period. Increasing female
participation in the retail sector will positively impact growing
number of female owned businesses coupled with higher income
and spending power.

7. Future Supply-Demand Gap
The negative decline in rental rates that occurred in 2016 due to excess
retail supply is expected to continue during 2017 as well; causing occupancy
rate to marginally increase as more retailers will look to expand their
business portfolio and open new outlets across the city.
Given the oversupply in the market, mall developers are expected to delay
large scale projects to ensure average rental rates do not continue to decline
in the future. The completion of this smart city along with other malls and
community centers coupled with a stagnant occupancy rate is expected to
cause retail oversupply to reach ~ thousand Sq M. of gross leasing area
during 2019.
The improving business environment and competitive rental rates are
expected to cause occupancy rate to remain relatively stable during this
period. Increasing retail supply along with a slow conversion rate is expected
to cause retail oversupply to reach ~ thousand Sq M. of gross leasing area by
2021.

8. Key Topics Covered in the Report:
Ksa Real Estate Market
Community Center Riyadh Market
Shopping Centres in Riyadh
Riyadh Retail Real Estate Market
Ksa Retail Real Estate Market
Al Sadhan Malls in Riyadh
Rental Rates Super Regional Malls Riyadh
Shopping Malls in Saudi Arabia
For further reading click on the link below:
https://www.kenresearch.com/manufacturing-and-construction/real-
estate/riyadh-retail-real-estate-market/122993-97.html
Related Reports by Ken Research
https://www.kenresearch.com/manufacturing-and-
construction/real-estate/qatar-real-estate-market/112182-97.html

9. https://www.kenresearch.com/manufacturing-and-
construction/real-estate/philippines-real-estate-market-research-
report/29319-97.html
https://www.kenresearch.com/manufacturing-and-
construction/infrastructure/bouwinvest-real-estate-investment-
management-bv/115221-97.html
Contact:
Ken Research
Ankur Gupta, Head Marketing & Communications
query@kenresearch.com
+91-124-4230204