How Riyadh Retail Market is Positioned?

Riyadh, the capital city of Saudi Arabia is situated on a plateau in the centre of the Arabian Peninsula. The retail industry in Riyadh is slowly transforming to the western model. Majority of the kingdom’s retail outlets in Riyadh are spread across super-regional, regional and structured shopping centers that have replaced the traditional strip malls and shopping center retail concept. The retail sector in Saudi Arabia has been hardest hit on the demand side by the expatriate exodus. Consumer staples have borne the brunt of the downturn. The cut-throat price-cutting has eased down a bit, but consumers are still price-sensitive. The retail real estate market has witnessed oversupply of retail space over the past few years. The supply-demand gap witnessed an unprecedented increase of ~% in 2018 owing to lower demand in Western and Southern Region, increasing preference for online shopping, lack of international brands and several other reasons. The average occupancy rates of super-regional, regional and community center malls within Riyadh were evaluated at ~%, ~% and ~% respectively in the year 2018.

Factors Influencing the Residential Market in Riyadh

Cinemas, Food & Beverages, Entertainments Segments in Shopping Centers

With e-commerce on the rise, cinemas, F&B and entertainment options are becoming increasingly important features of shopping centers, and will continue to play a greater role in influencing this retailing sector. Saudis were spending about USD ~ billion annually on tourism and development outside the Kingdom, which makes the argument to allow movie theatres open a domestic market expected to be worth up to USD ~ billion in annual box-office sales by 2030.

Retail Spending Trends

Retail spending which includes revenue generated from food and non-food retail outlets ranging from small convenience stores to large scale supermarkets and hypermarkets has been rapidly rising in the city. The rise in per capita disposable income in the country has positively impacted an individual’s expenditure on food and non-food products during the review period. This has enhanced profit for a broad category of retailers ranging from single store retail outlets to those located in malls.

Introduction of VAT

In a market that has been tax-free, the introduction of VAT, even at a relatively low rate of 5.0%, has caused a shift in consumer behavior. The consumers in Saudi are cost-conscious. Companies that can tap into additional value through economies of scale, or provide greater convenience, are reaping the rewards.

However, the retail sector is expected to rebound by 2019. The Saudi government’s initiatives such as allowances to public sector employees and increases in subsidies and social spending will help boost the purchasing power of Saudi citizens.

Tourism, Population and Demographics

Another major factor influencing the retail market in Riyadh is the tourism. This strong growth in the tourist arrivals has impacted positively on retailers. The international arrivals to Saudi Arabia are expected to increase ~% per year from 2018 to 2023. Moreover, the majority ~% of the population is aged 30 or under, the prime market for retailers. They are probably newlyweds so household formation is a big driver – the furniture and white goods needed in a new house, all the other things that follow: nursery items, children’s outfits, and so on.

Rising Disposable Income

The disposable income in the country were estimated to reach SAR ~ billion in 2018 increasing from SAR ~ billion during 2013 at a CAGR of ~% over the years. The growth in disposable income has improved the standard of living with individuals increasing their expenditure on entertainment and consumer retail products.

The rising expenditure by individuals has positively impacted demand for retail space, especially in regional and super-regional malls.

Growing Presence of Hypermarkets and Supermarkets

Hypermarket and supermarket chains continue to expand in Saudi Arabia. The total number of supermarkets and hypermarkets in Saudi Arabia in 2016 were estimated at ~ stores, accounting for approximately ~% of retail outlets.

A major trend witnessed in recent years is the shift in location of hypermarkets and supermarkets from stand-alone stores towards developed regional and super-regional malls due to the increase annual footfall across these retail formats.

Major hypermarkets including Abdullah AlOthaim Markets, Lulu Group and Savola Group have built supermarkets and hypermarkets with dedicated area for retail outlets, restaurants and family entertainment zone.

Emergence of International Brands

A high amount of retail space is expected to enter the market to meet the demand generated by the emerging international brands. Currently, there are numerous international brands that are willing to open stores in Riyadh since the opening up of the economy and growing awareness of international brands within the general public.

Relaxation in Investment Regulation

Given the oversupply of retail space, especially in Riyadh, the government has eased investment regulation in the retail sector to boost inflow of international brands into the country. In June 2016, the Saudi government announced that it will allow foreign companies to wholly own Companies in the Saudi retail and wholesale trade sector (allowance of ~% FDI). Foreign companies were previously required to partner with Saudi investors to establish retail or wholesale outlets, and may still find it advantageous to do so.

Tenant Mix

The shift towards mega and structured shopping malls has been the result of tenants who were seeking to garner the benefit from the higher footfall and integrated spaces and a shift in consumer shopping experience towards leisure and entertainment. Tenant mix in the resident malls is mainly focused on fashion with more than ~% space, health & beauty holds around ~% space and the entertainment section has around ~% space in the overall mall. To attract the customers and get them walking through the entire centre, designers, developers, and managers try to optimize the selection and special configuration of tenants in a shopping center. The attractiveness of shopping centers is at least partially related to the composition of the tenant mix.

Climate Conditions

Majority of cities in Saudi Arabia either experience hot and humid weather or hot and dry weather throughout the year, making indoor facilities an ideal leisure destination amongst the population. Thus, majority of individuals prefer to spend their summer vacation and free time in malls and community centers, especially during the festival of Ramadan.

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

Retail Real Estate Consulting Companies

Time Period Captured in the Report:-

Historical Period – 2013-2018

Forecast Period – 2019-2023

Riyadh Retail Malls Case Studies Covered:-

Pure Mall

Al Oruba Square

Canary Center

Localizer Mall

Granada Center

Centria Mall

Keywords:-

Riyadh Retail Market

Retail Industry In Riyadh

Retail Market In Riyadh

Riyadh Retail Market Growth

Riyadh Retail Market Major Players

Riyadh Retail Market Revenue

Riyadh Retail Real Estate Market

Market Retailers in Riyadh

Retail Market Projects in Riyadh

Retail Development in Riyadh

Riyadh Market Structure Plan

Number of Supermarkets in Riyadh

Number of Hypermarkets in Riyadh

Retail Overview in GCC

Future Analysis Retail Supply Riyadh

Future Community Center Mall Supply Riyadh

Riyadh Retail Restaurants Rental Prices

Rentals Outside Malls in Western Riyadh

For more information on the research report, refer to below link:-

Riyadh Retail Market

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