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JLL MENA issues first real estate study on Holy Cities of Makkah and Madinah
Chiheb Ben-Mahmoud, Senior Vice President at JLL MENA
“As Holy cities, Makkah and Madinah are absolutely unique in nature and this is the first report by a global firm that provides a holistic overview of the Holy Cities’ real estate market. We have seen regionally that, attention is being directed towards the Holy Cities and it has become essential to report on the major development plans being undertaken in these Holy Cities. The Saudi Government in particular has taken great strides to capitalize on the real estate in the both cities to better be able to accommodate a larger volume of pilgrims.”
The report states that “Given the significant movement associated with the Hajj, the prime constraint is imposed by the ground transport system rather than broader airport / seaport capacities or the ability to provide sufficient lodging capacity. Total (Hajj plus Umrah) visitors have increased from 5.3 million to 7.7 million over the past 5 years.”
“Our analysis of potential capacity constraints suggests that the total number of Hajj and Umrah pilgrims visiting Makkah and Madinah could increase to 13.75 million by Hijri year 1440 (2019). The increased number of pilgrims will provide significant opportunities for additional hotel rooms in both Makkah and Madinah” said
JLL MENA expects the number of pilgrims performing Hajj to increase less rapidly than those performing Umrah due to the more concentrated timeframe of the Hajj. This ultimately means more significant capacity constraints, bottle necks and challenges involved.
A large number of initiatives are underway to alleviate the current infrastructure constraints to efficiently accommodate a larger number of pilgrims, which are estimated to reach around 13.75 million by Hijri year 1440 (2019). Although land ownership in the Holy Cities is limited to Saudi entities, there has been significant GCC and other foreign investment attracted to these markets in the form of Joint Venture agreements with Saudi entities. These include:
Among the major projects in Central Makkah for which master plans have been approved are:
These infrastructure improvements are likely to result in a major increase in visitor arrivals to the Holy Cities over the next 10 years. The increased number of pilgrims and changes in their lodging requirements will provide opportunities for a major expansion of the hospitality market within these cities.
“Our analysis of potential visitor arrivals suggests there could be demand for around 82,000 hotel rooms in the Holy Cities by Hijri year 1440 (2019). The major implications of this increased demand include leading international operators competing to deploy their most prestigious upscale brands within future hospitality projects in the Holy Cities. However, the extent to which these brands are in line with the current and future demand profile remains an open question.
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