The Dammam Metropolitan Area’s (DMA) office market is expected to witness a positive long term impact from government efforts to diversify and develop high growth industries with projects such as the King Salman Energy Park (SPARK), advisory firm JLL said in a recent report.
As one of the largest contributors to Saudi Arabia’s oil GDP, economic diversification within the DMA is key to attracting future foreign investment and stimulating development opportunities. With an estimated GDP contribution of SAR 22 billion by 2035, the park’s unique infrastructure is expected to create an upsurge in commercial activity, boosting future job opportunities and subsequent office demand.
“Megaprojects of this scale are shaping the future performance of Saudi Arabia’s overall real estate market, driving non-oil economic growth as part of Vision 2030. The development of the new energy park is a major step towards increasing economic contribution from different sectors in the industrial and logistics hub of the Kingdom,” said Dana Salbak, associate, JLL MENA.
SPARK has been designed to position Saudi Arabia as a global energy, industrial and technology hub, consisting of five main regions focusing on general manufacturing, liquids and chemicals, metal formation and industrial services. The megaproject, being developed by Saudi Aramco, was inaugurated in December 2018, with the first phase expected to complete in 2021.
“The office market is a key real estate sector set to benefit from the large scale investments across the DMA. While rents remained under pressure in 2018 because of limited occupier demand this is expected to change in the long-term on the back of Vision 2030 and the government’s commitment to expanding key industrial sectors. This is in turn expected to boost demand for office space.” she added.
With the delivery of over 80,000 square meters of GLA over the next two years rents are expected to remain under pressure.
While vacancy rates remained relatively stable in 2018, registering 31 percent at year-end, rates are expected to increase as further supply enters the market, JLL said.
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