Riyadh’s real estate market is much more stable than in other GCC cities and offers big opportunities, says a recent report by Jones Lang LaSalle, the world’s leading real estate investment and advisory firm.

The Riyadh City Profile is being issued to coincide with Cityscape Saudi Arabia, which will take place from June 14 to 16 at the Jeddah Center for Forums and Events.

The Jones Lang LaSalle city profile lists home finance, regulation, investors and an increase in the number of experienced developers as other key requirements for the success of the capital’s real estate market.

“Since we opened our first offices in Riyadh and Jeddah we have been able to study Saudi Arabia’s real estate market in-depth at firsthand and are pleased to publish our findings in our three-part series,” said John Harris, head of Saudi Arabia operations for Jones Lang LaSalle.

“First out, the Riyadh City Profile presents an objective analysis and comes to an optimistic conclusion that solutions to the main factors challenging all sectors are underway and that, with strong government support, the real estate market is stabilising and all set for robust growth,” he added.

The reports analyses the challenges and assesses the opportunities in the Kingdom’s real estate markets. It indicates that all sectors are either approaching or have passed their cyclical peaks over the past six months, noting that minimal price and rent increases have been recorded and prices and values are declining in many sectors along with a continued correction in the price of land.

According to the report, the office market in Riyadh is booming with 1.1 million sq mt of office space expected to be delivered during the years 2009-2014, while demand has been further boosted by the announcement that the Central Bank for the GCC Monetary Union will be housed in the King Abdullah Financial District in Riyadh.

On the other hand, demand from overseas companies has been subdued over the last six months, but as opportunities for foreign businesses increase in Saudi Arabia, a return to the market by the multinational corporate sector is expected in 2010.

Rent levels are expected to increase again in 2010 but might come under pressure in 2013 when the big new projects like the Financial District and the ITCC start to hit the market.

Riyadh is already the biggest city in the GCC. Among favourable aspects for the real estate market, continuous population increase fuelled by family growth and inward migration of expatriates, Riyadh is necessitating ever more residential accommodation, accompanied by a rise in demand for hotels and commercial properties.

At the same time, continuous investment in infrastructure projects has supported long-term growth of the city and currently, the government is making major investment in new ring roads, schools, hospitals, increased electricity and water capacity.

Looking at the residential real estate market, the profile considers the main challenge facing the Riyadh market is how to provide for the increasing shortfall in affordable housing. Currently there are less than 3,000 completed housing units available and only 4,000 serviced plots ready for construction by families.

The report goes on to note that the demand for housing in Saudi Arabia has been relatively unaffected by the global credit crunch and points out that a number of new real estate investment funds are being created to develop residential property in Riyadh in partnership with local landowners, constituting an early indicator of possible increase in the supply of housing.

The major remaining questions are the relatively small number of experienced house builders in the local market and continued uncertainty over the confirmation of the mortgage laws, although these are considered to be well drafted and are expected to boost the residential market.

Turning to the retail secto