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according to JLL MENA’s Jeddah Real Estate Market Overview Q3 2011.
The JLL MENA report also looks at the office, retail and hospitality sectors of the market.
Office Market: Although there has been a reduction in Jeddah’s CBD vacancy in Q3, office rents are likely to reduce in 2012 once additional supply is released to the market. The expected CBD supply pipeline will provide approximately 60,000 sq m GLA of additional space to the current stock of 445,000 sq m by the end of 2012. As a consequence, the office market is expected to remain tenant favourable during the next two years. Competition will concentrate on quality office space and landlords of older and secondary buildings will be required to develop their offerings by improving workplaces, enhancing security and increasing parking provision to attract occupiers.
Retail Market: Retail centres continue to benefit from high occupancy rates and the majority of the new supply has already been preleased. Retail sales have increased by more than 30% during the last eight months which demonstrates strong consumer spending. Pilgrim retail consumption during Hajj will provide a further boost to the sector over the remainder of 2011.
Hotel Market: The first three quarters of 2011 showed a marked improvement in hotel occupancies with rates increasing 5% year-on-year. Growth in business travel is expected to fuel hotel demand in the city. A strong Ramadan Umrah season over the summer reinforced Jeddah’s hospitality sector performance and the city looks well positioned to benefit from increasing domestic tourism over the long term.
The report provides key advice for Jeddah based landlords, occupiers, retailers and hotel operators, as well as anticipated trends for the near future.
Commenting on the report, Craig Plumb, Head of
Research at JLL MENA said:
“The SAR 500 million economic stimulus package announced earlier in 2011 has sustained the Jeddah real estate market during 2011. With Saudi Arabia’s oil output having been boosted to offset lower supply from other MENA producers and oil prices remaining relatively stable over recent months, there is likely to be increased investment in the infrastructure and real estate sectors of the economy over the next 12 months. The residential sector is likely to remain the ‘hot spot’ during 2012, with further opportunities to create more affordable housing products. Moreover, continued growth in real estate financing and private sector lending will give a further boost to the overall real estate industry.”
Soraka Al Khatib
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