Retail sector gearing up for new entertainment options in Jeddah
The retail sector witnessed a boost in sentiment, with many shopping centre owners making preparations for the introduction of cinemas, highlighted the Q1 Jeddah Real Estate Market Overview report released by JLL today
Cinemas, F&B and entertainment options are becoming increasingly important features of shopping centres and will play a greater role in the retail sector's performance in the future as retailers capitalise on new opportunities. Despite this, retail rents generally softened in Q1 2018, while vacancies remained relatively stable in comparison to Q4 of 2017
"With the rapid social and economic changes being introduced across the Kingdom, there has been a boost in sentiment towards the retail sector, as cinemas and other entertainment options are introduced in the market," said Eng. Ibrahim Al Buloushi, Country Head, KSA, JLL.
"A number of cinema operators have already signed MoUs to operate theatres across the Kingdom, and shopping centre owners are responding by making arrangements to capitalise on entertainment options. With recent projects by the Jeddah Metro Company revived in March, the overall activity in the construction sector could receive a boost once construction commences," he added.
Other sectors of Jeddah's real estate market continue to be affected by challenging market conditions leading to developers delaying or reducing the size of their projects.
The hotel sector witnessed two completions in Q1 2018 with a pipeline of other properties expected to enter the market this year. Hoteliers continue to expand their brands to target specific segments of the market and will need to continue to be competitive as recently introduced taxes could put pressure on demand from local tourists, negatively impacting already strained performances which have seen both ADRs and occupancies decline in Q1 2018.
The office sector faced delays in the delivery of several projects as office rents declined 12% in Q1, compared to the same quarter last year, causing projects to be put on hold. This fluctuation in this sector has caused a slight decline in future office supply, but opportunities still exist in the small and medium business sector.
The residential sector witnessed a continued decline in both rents and sale prices, but the rate of decline slowed compared to that seen in recent quarters. While there were no notable completions recorded in the residential sector in Q1, further new supply id expected to enter the market later in the year.