A number of new projects have entered the Dammam Metropolitan Area (DMA) market over the last two years, with most sectors experiencing a growth in prices and rentals, JLL, the world's leading real estate investment and advisory firm, said Wednesday in its first "Dammam Metropolitan Area (DMA) Real Estate" report that assesses the office, residential, retail and hotel sectors of Saudi Arabia's fast-developing economic hub. However, the pace of growth is now slowing as the market approaches the peak of its cycle and this is likely to result in project delays and a lower rate of materialization going forward particularly in the office and hotel sectors, the report noted. The report, which will be released on a bi-annual basis, follows the opening of a new JLL office in the DMA, the commercial center of the Eastern Province of Saudi Arabia. The new office will further strengthen JLL's presence and continues its commitment to providing strategic marketplace advice in the Kingdom. "We have solid and long-standing relationships in Saudi Arabia which have been built on trust and a dedication to delivering exceptional services to our clients," said Jamil Ghaznawi, National Director and Country Head of JLL Saudi Arabia. "Having an office in Al-Khobar is the next step in enhancing our presence whilst also ensuring we continue to develop meaningful connections that add even greater value to the business community. As Saudi Arabia moves to diversify its economy, we are taking our commitment to the next level." While the office market is expected to remain subdued over the short term, Grade A office buildings continue to outperform lower grade office space, with demand from both new entrants and companies upgrading from older and poorer quality space. The established destinations of Al Rashid Mall and Mall of Dhahran continue to dominate the market, however, competition in the retail sector is expected to increase with a number of regional shopping centers in the pipeline. And with many guests continuing to prefer furnished or serviced apartments, competition in the hotel sector is also expected to increase, with a large number of keys planned to enter the market over the next two years. "As the Saudi economy changes, we will see competition in key sectors such as retail and hotels start to develop at a greater pace over the coming years, particularly given the DMA's connectivity to the surrounding GCC region which offers it huge potential for growth," said Ghaznawi. DMA sectoral highlights: n Residential: JLL currently estimates the residential stock to be 331,000 residential units in the DMA, formed mostly of dated standalone villas and low rise apartment buildings. The majority of future supply comprises standalone villas and individual apartment buildings. However, master planned residential projects are increasing in number. As central areas in Dammam become saturated, there is a noticeable expansion of residential development to the West of the city. A further 26,000 units are expected to enter the market in the DMA over the next three years. While small to mid-scale developers are expected to deliver the majority of upcoming supply, there are a number of larger master planned developments ranging between 100–300 units being developed by major developers such as Al Argan, Emaar and Injaz. These projects often face delays in the approval processes increasing the development timeframe, and JLL expects the low materialization rate experienced over recent years to continue. n Office: There is currently approximately 977,000 sq m of quality office space across the DMA. Despite delays to many projects, recent completions have included Bottoyr Tower (22,500 sq m), Noura Tower (9,900 sq m), Al Othman Business Tower (22,400 sq m), Khobar Gate Tower (22,000 sq m) and Dar Al Yawm (34,000 sq m). A further 91,000 sq m of office space is expected to enter the market in 2016, which will bring supply in the DMA to over 1 million sq m. Further delays are however expected to reduce the potential supply entering the market in 2017 and 2018. n Retail: There is currently just over 1 million sq m of mall based retail space across the DMA. A further 324,000 sq m of quality retail space is expected to enter the market by the end of2018. Faisaliah Mall by Hamat Real Estate is scheduled to add 33,000 sq m to the Dammam market in 2016 and Arabian Centers are planning to add two new malls in the DMA: Dammam Mall (2019) and Dhahran Boulevard (2018). n Hotels: JLL currently tracks approximately 6,100 keys in the DMA classified as 3, 4 or 5 stars. A number of new hotels have entered the market over the past 12 months including the Park Inn by Radisson Dammam (90 keys), Hawthorn Suites Al Khobar (38 keys) and Habitat Hotel (360 keys). A significant 2,000 further keys are currently planned or under construction across the DMA over the next two years. Planned projects include the Kempinski Al Othman Al Khobar (218 keys), Double Tree by Hilton Al Khobar Corniche (132 keys) and Four Points by Sheraton Dhahran (236 keys). As with other sectors of the market, further delays and cancellations are however expected to reduce the level of actual delivery. In addition to opening an office in Al-Khobar, JLL also recently signed a Memorandum of Understanding (MoU) with the Eastern Province Chamber of Commerce & Industry to improve transparency in the region's residential, retail, office and hospitality real estate market. The DMA - formed by three main neighboring cities of Dammam, Dhahran, and Al-Khobar - lies at the heart of the Eastern Province, which historically has been considered as the economic powerhouse of Saudi, accounting for around 50% of the Kingdom's total oil and gas reserves. The economic diversification of the national economy will inevitably reduce the country's traditional dependence on the hydrocarbon sector over time and will increase the importance of its other distinctive characteristic - its close connectivity to the surrounding GCC nations. – SG