RIYADH: Demand for offices remained strong in Saudi Arabia in the first quarter of 2023 as global and local businesses continued to scout for quality spaces in the key cities despite limited supply in the market, the latest report from global consultancy firm CBRE showed. Most of the offices in Riyadh witnessed nearly 100 percent occupancy, resulting in Grade A and Grade B properties recording a year-on-year rise in average rental rates of 9.3 percent and 14 percent, respectively, in the first quarter. Jeddah saw its Grade A office rents increase by 13.8 percent in the 12 months to March 2023, whereas Grade B rents slightly rose by 1 percent, the CRBRE report said. The Kingdom’s second-largest city witnessed occupancy rates for Grade A and Grade B offices rising to 91.8 percent and 79.3 percent, respectively, in the first quarter. “Despite heightened levels of demand from occupiers, which continues to be centered towards Riyadh, there is a considerable lack of Grade A stock available for immediate occupation. This is driving strong performance in this segment of the market across the Kingdom,” said Taimur Khan, CBRE’s head of research for the Middle East and North Africa. Residential sector In the residential sector, the average apartment price in Riyadh increased by 17.3 percent annually. However, in Jeddah, Dammam and AlKhobar, the average apartment prices dropped by 0.7 percent, 2.5 percent and 1.6 percent, respectively. In the villa segment, the CBRE report said major cities in Saudi Arabia mainly saw positive performances in the first quarter, with average prices improving in Dammam, Jeddah and Riyadh by 28.1 percent, 10.2 percent and 6 percent, respectively. In the first quarter, the volume of residential transactions reached 30,213 deals, with the overall value hitting SR22.8 billion ($9.58 billion). As for the Kingdom’s new loans, houses made up the majority share with 68.8 percent, apartments retained 25.8 percent and land accounted for the remaining 5.4 percent in the first quarter of 2023. Khan added: “In the residential market, due to higher costs of financing and lack of suitably affordable options, we have seen a marked decrease in transaction activity and fragmented price performance, with Riyadh being the only location to continue to see price growth in both the apartment and villa segments of the market.” Tourism sector Saudi Arabia’s tourism markets exceeded pre-pandemic levels amid a massive push to develop the Kingdom’s tourism and hospitality sectors, revealed the report. All key performance indicators of hotels improved in the first quarter of 2023, with the average occupancy rate in the year to date to March 2023 increasing by 11.5 percentage points. This helped hotels improve their average daily rates, which increased by 32.3 percent, resulting in their revenue per available room seeing massive growth of 58.6 percent over the same period last year.