What to take into your next appraisal
- Keep asking prices, completed sales and incentives separately identified.
- Normalise the unit and area basis before comparing rates.
- Use indices for their stated purpose rather than treating them as price lists.
Understand the official series
GASTAT publishes methodology for its real estate price index. Read its coverage, property classifications and calculation basis before using it to contextualise a project. An index describes price movement for its defined population; its level is not a SAR per square metre quote for a specific Riyadh district.
Record the release date and observation period. A current publication can still describe earlier transactions, and a broad residential category can differ substantially from the product being developed.
Sources: General Authority for Statistics: Real Estate Price Index methodology
Create a comparable register
Record district, transaction or asking date, building age, completion status, unit size, area definition, parking, fit-out, tenure and incentives. Mark the evidence source and whether the amount is verified. Remove duplicates so the same listing does not appear to be multiple independent observations.
Use separate groups for materially different products. A villa land-and-building price should not be mixed mechanically with an apartment internal-area rate. Adjustments need a stated reason and should be distinguishable from observed prices.
Show how screening changes the answer
A synthetic exercise starts with apartment rates of SAR 8,000, 8,400, 8,600, 9,000 and 13,000 per square metre. Their median is SAR 8,600. Suppose the SAR 13,000 observation is a furnished premium unit outside the target specification.
The remaining four observations have a median of SAR 8,500, the midpoint of SAR 8,400 and SAR 8,600. These are invented numbers, not Riyadh transaction evidence. The purpose is to preserve the exclusion reason and show how a reproducible statistic changes.
Translate the rate into a saleable inventory
At a fictional 10,000 square metres of saleable apartment area, SAR 8,500 per square metre produces SAR 85 million of gross revenue. A 5% price downside reduces it to SAR 80.75 million, a SAR 4.25 million reduction before variable selling costs and taxes.
Keep unit-specific premiums and discounts visible. If the average is area-weighted, reconcile total unit revenue divided by total area to that reported rate. Do not average unit rates without weights when unit sizes differ.
Use evidence to set the next research task
The pricing paper should show retained and rejected observations, the subject adjustments and the sensitivity that would change the acquisition decision. A small evidence set deserves a wider scenario range, not extra decimal places.
Refresh the register after a design change or a long acquisition delay. Record the original base case as well as the revision so a later reviewer can distinguish a market change from an analyst change.
Sources and further reading
- Real Estate Price Index methodology General Authority for Statistics
- Valuation of development property RICS
Published by Feasly. How we prepare our guides. Suggest a correction.
