Saudi Arabia’s lifting of quota on Hajj pilgrims has boosted the Makkah property market during the first half despite major infrastructure works on the Grand Mosque.
Property consultancy JLL particularly noted that Makkah was the only major city in the Kingdom to have witnessed a significant increase in sales activity in the residential sector over the first half, as prices dropped to reasonable rates and induced interest from buyers.
Residential transactions grew 12 percent over the first half of the year compared with the same period last year, prompted by a drop in Makkah land prices, the consultancy said.
Meanwhile, government numbers showed a higher number of Umrah pilgrims during the first half, with visa issuances up 5 percent to 6.7 million compared with last year’s Umrah season.
“The rising number of pilgrims can be attributed to the partial completion of the Holy Mosque expansion, and extending the Umrah season by an additional month,” JLL said in its report.
The policy shift should benefit Makkah’s retail and hotel sectors, particularly those located centrally and near the holy sites, as they typically enjoy above average business during the pilgrimage season.
During the first half, approximately 7,000 square meters of retail space entered the Makkah property market while 1,900 keys were added in the area’s hotel sector, with Hilton Makkah Convention Hotel contributing 783.
Retails rents for regional, neighborhood shopping centers and community centers remained largely unchanged in the first six months, although rates in Markazia decreased by 7.5 percent during the period.
The hotel sector meanwhile is expected to pick up momentum this year during the 2017 Hajj season, after experiencing lower occupancies and average daily rates earlier on.
On the office segment, the property consultancy said that average office rents in Makkah stood at SR605 per square meter during the first half, 5 percent lower from last year’s SR637 per square rate. Vacancy rates however fell to 16 percent from 19 percent last year