Riyadh Retail Industry Research Report And Forecast To 2023: Ken Research Current and Future Supply

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Riyadh Retail Industry
Research Report And Forecast To 2023: Ken Research

Current and Future Supply and
Demand Assessment

The Retail
Market In Riyadh has witnessed oversupply of retail space during
2013-2018. The retail supply has escalated at a CAGR of ~% from 2013 to 2018
owing to government implementing several key initiatives such as allowance of
~% FDI in retail sector and lifting ban from cinemas. The demand has although
declined from last year primarily due to implementation of VAT by the
government. There has
been oversupply in terms of retail units within the country due to a
deceleration in economic growth triggered by the fall in oil prices.

In future, with implementation of Saudization policy by the
government, increase in number of cinemas and other factors, it is anticipated
that the supply-demand gap will decline in the retail market in Riyadh. It is
anticipated that that the demand of retail space will increase to ~sqm in 2023
from ~sqm in 2018 owing to multiple reforms by the government. Some of these
reforms include allowance of ~% FDI in retail sector, lifting of ban from
cinemas and implementation of Saudization. These reforms over the long term aim at overcoming the
multiple obstacles that are being faced by the retail sector such as the
decline in the rental rates and the oversupply situation. Emergence of
international brands has been gaining popularity in the retail market. Some of
the key expected upcoming retail projects in the KSA include Cordoba Boulevard,
Al Diriyah Festival City Mall, City Center Ishbiliyah, and Mall of Saudi.

Competitive Analysis

Over the past few years, the landscape of Riyadh’s retail sector has
transformed from a conventional market place comprising unorganized independent
stores and shops to organized large-scale shopping malls and hypermarkets that
house the largest global brands. The retail sector in Riyadh is now highly
competitive. Given the fragmented nature of Riyadh’s retail sector and rising
popularity of organized retail, consolidation is likely with larger players
growing inorganically to capture market share. These players keep innovating on
strategies like product differentiation, price-related offers along with
placing the mall distinctively in the minds of patrons through various
entertainment packages like amusement parks and food courts.

Market Insight and Performance

After witnessing a growth for the last four years, the demand for
retail space in Riyadh witnessed a decline in the year 2018 owing primarily to
introduction of VAT coupled with other factors such as rising e-commerce
retail. Among different mall categories, super-regional malls had the highest
occupancy rate in 2018, followed by regional malls and community centers.
Average rentals rates have also decline over the last year reflecting the
decline in demand.

Key
Segments Covered:-

Type of
Malls

Super-Regional
Malls

Regional
Malls

Community
Center Malls

Key Target Audience:-

Retail
Project Developers

Third
Party Real Estate Companies

Independent
Architects

Government
Associations

Government
Agencies

Independent
Investors