Monday / October 22.
HomeFeatured BlogsAll sectors of Jeddah real estate market remain in growth phase, according to JLL

All sectors of Jeddah real estate market remain in growth phase, according to JLL

SAUDI ARABIA.  JLL, the world’s leading real estate investment and advisory firm, today has released its second quarter (Q2 2015) Jeddah Real Estate Overview report that assess the latest trends in the office, residential, retail and hotel sectors.

Mr Jamil Ghaznawi, National Director and Country Head of JLL KSA, commented: “In the second quarter, the Jeddah real estate market remained in the upturn stage of its cycle. The Hotel and retail sectors appear closer to the peak than office and residential, where further rental growth may be experienced over the rest of the year. 

“The performance of the residential market remains mixed, with apartments seeing continued rental growth while villa rents have declined. Given there was limited new supply of office space entering the market, occupancy and rental rates have remained healthy and are likely to continue to increase with limited levels of future supply. However we have seen retail rentals stagnate ahead of significant levels of new supply entering the market”.

He added: “With the new integrated action plan from the Ministry of Housing, we anticipate an easing of the current shortage of affordable homes and a subsequent boost to the prospects for economic growth.”

SECTOR SUMMARY HIGHLIGHTS  – JEDDAH:

• Office: Office vacancies remain stable at around 6% of the total stock, which is 2% below the levels experienced in Q2 2014. Average rents for Grade A and B have increased by 6% annually and by 3% quarterly. The supply of office space in Jeddah has been increasing at a consistent level of between 90,000 sq m – 120,000 sq m per annum over the past few years, mostly in small to medium sized developments. This trend looks likely to continue with relatively limited levels of future supply.

• Residential: Around 12,000 residential units have been completed across Jeddah so far this year, with a similar level of new supply expected over the rest of 2015. Citywide, villa prices have increased by an average of 4.5%, due mainly to prices increasing in the Western Districts which are characterized as ‘high-end’ and are less affected by recent changes to the mortgage laws. The apartment market has generally performed better than the villa sector, with sale prices and rents increasing by 11% and 14% respectively over the past year.

• Retail: Retail rents remained relatively stable in Jeddah, with rents in super regional malls increasing by 2% and those in regional malls by less than 1% over the past year. Vacancy rates have also been relatively stable, increasing marginally from 6.8% in Q1 to 7.2% in Q2. While limited additions are planned for the second half of 2015, there is a substantial amount of new supply expected in 2016 and 2017 which could increase the total supply of retail space in Jeddah by more than 35% over the next two years. With significant levels of supply over the medium term, JLL expects competition to increase, negatively impacting the performance of dated shopping centers and those located away from the growth corridor of the city.

• Hotel: Hotel occupancies year-to-May stood at a healthy 75% (slightly lower than the same period last year). ADRs currently stand at USD 242, around 2% below year-to May 2014 data. As a result RevPAR lost 3.4%. Overall Jeddah remains a very strong hospitality market with healthy occupancy levels and  the third highest ADR in the region after Dubai and Riyadh, which indicates that the hospitality market in Jeddah is geared towards high end hotels. While there is potential for an oversupply of up market hotels over the next two years, opportunities remain in mid-scale and budget sectors. Among the major openings during the next few months will be the Ritz Carlton and three serviced apartment properties by Ascot.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000.  On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $55.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.

For further information, visit www.jll.com.

About JLL MENA
Across the Middle East, North and Sub-Saharan Africa, JLL is a leading player in the real estate market and hospitality services market. The firm has worked in 35 Middle Eastern and African countries and has advised clients on real estate, hospitality and infrastructure projects worth over US$ 1 trillion in gross development value. JLL MENA employs over 220 internationally qualified professionals embracing 30 different nationalities across its offices in Dubai, Abu Dhabi, Riyadh, Jeddah and Cairo. Combined with the neighbouring offices in Casablanca, Istanbul, Johannesburg, Lagos and Nairobi, the firm employs more than 600 professionals and provides comprehensive services in the wider Middle East and African (MEA) region.

For information, please visit our website: www.jll-mena.com

This entry passed through the Full-Text RSS service – if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.