1. Companies are shifting their focus from Riyadh to Jeddah due to higher demand of Grade A warehouses as result of better quotations and newer facilities.
- Demand in Jeddah is poised to increase due to shifting companies and investors such as interest towards Jeddah as a potential market for expansion and storage of their products and goods. Most of the warehouses will be establishes on a public-private partnership between the government entity MODON and private investors such as Al Bandar Company.
- Al-Khomrah district has been a particular favorite amongst warehouse developers due to its proximity to the industrial cities in Jeddah and the city’s main seaport, Jeddah Islamic Seaport. Hence, it has been anticipated that more demand will come from Al-Khomrah district in future.
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2. The Supply of Grade A warehouses is very limited in Riyadh creating shortage of preferred warehousing space
- Riyadh is currently facing supply-demand gap with shortage of warehouses in few months of the year which has shifted the bargaining power in the hand of real estate developers to charge lease rates as high as SAR 350/sqm/annum in few districts of Riyadh. This issue is highly prevalent for temperature controlled and retail warehouses.
- In line with Saudi Vision 2030, the government focus to increase non-oil products is leading to the expansion of other sectors such as FMCG and hence increasing the demand for warehouses.
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3. Strong growth in Industrial/ Retail Grade A warehouses due to Institutional Investors.
- Riyadh has higher Grade A space than Jeddah.
- Few Projects/ warehouses especially for Grade A which will be completed in future are Starlinks, Saudi logistics and supply chain solutions company, announced the opening of a new fulfilment center of 37,000 sqm in a bid to advance eCommerce in the kingdom.
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