Jeddah property market sentiment gets boost from Saudi

Initiatives being implemented by the Saudi government have improved sentiment in some of Jeddah’s property sector during the third quarter, a report from real estate specialist JLL said.
This bodes well as it indicates that the Jeddah market is nearing the bottom of a downward cycle as initiatives to boost tourism, pilgrimage, investment and local entertainment options are starting to reap benefits, JLL said.
For one, the government’s decision to permit 100 percent ownership of companies in additional three sectors — engineering, education and health care – not only widened the Kingdom’s economic base but also encouraged foreign direct investment.
“The relaxation of investment regulations and plans to prioritize various government holdings should increase demand for commercial space as investors, financiers, consultants and new companies move into the Jeddah market,” JLL said.
The total stock of office space by the third quarter remained at around 1 million square meters, but an additional 51,000 square meters were expected to be added by the end of 2017.
Office rents declined 11 percent year-on-year during the period, and 2 percent over the quarter, as new supply continued to outpace demand.
With additional office spaces expected to come into the market, JLL said declines could be expected until the full impact of the Saudi government’s economic reforms became evident.
“Until then, office rents in Jeddah are likely to remain competitive, favoring tenants over landlords,” it said.
On the residential segment, the Saudi government’s initiative to provide housing loans to citizens, combined with the provision of developed land and residential lands through the Wafi program, was expected to benefit 280,000 this year.
The government assistance should increase the take up of available residential properties in Jeddah, which during the third quarter was approximately 812,000 units.
JLL said that while residential rents in Jeddah continued to soften quarter-on-quarter, the decline in rentals were more pronounced on an annual comparison to as high as 9 percent for apartments. There could be further pressure apartment rentals, the property specialist noted, as demand may be affected by recent restrictions on expatriate labor.
On the hotel segment, JLL said the announcement of the Red Sea project should enhance tourism growth in the area as the development of resorts and parks in the city should make it more appealing to families and leisure tourists.

Source:Arabnews