Riyadh – Mubasher: Jeddah’s rental values in the housing sector dropped 9% quarter-on-quarter and 8.5% year-on-year in the first quarter of 2017, pushed down by the economic slowdown and departure of expatriates, according to a new report by JLL.
Office spaces increased by 23,000 square metres in parallel to vacancies as demand softened throughout Q1-17, while healthcare provider tenants are increasing in the city, according to the Jeddah Real Estate Market Overview report.
The retail sector saw vacancies increase by 1%, reaching 11% in Q1-17, as household spending power has been declining. The government-launched Citizens Account scheme is expected to alleviate the burdens on families and restore household buying power. The possible introduction of cinema theatres also keeps shopping centre owners’ hopes up regarding attracting higher footfall, according to the report.
While the hotels sector has shown a slow start to the year, Jeddah now hosts almost 10,000 keys, with two new brands expected to the enter the market over the next two years, namely the Langham Jeddah and DoubleTree by Hilton.
It was also decided to lift the 20% reduction of Hajj quotas by the Kingdom, indicating that hotel operators will benefit from the influx of pilgrims in 2017.
“We predict there will be increased activity in the real estate sector through the public investment fund, the listing of further REITs, taxation reforms, and a series of public private partnerships,” Craig Plumb, head of research at JLL, MENA, said.
The new Ejar (leasing) regulations on the residential sector add to the attractiveness of the sector to investors, and increases confidence in the market, the report explained.
“With Vision 2030 in place, and the economy adjusting to lower economic growth, 2017 is set to become a watershed year for the Kingdom’s real estate market,” Plumb highlighted.
