Growing entertainment events and attractions supporting demand for key Jeddah real estate sectors
The report also highlights the importance of increased amenities and facilities within residential community developments
Jeddah’s retail sector is benefitting from several new projects and developments, adding approximately 40,000m2 of retail gross leasable area (GLA) to the market, according to the latest report released by global real estate consultancy firm CBRE.
CBRE’s H2 2019 Jeddah Market Snapshot highlights that the retail sector expects a further boost with an additional 0.66 million m2 GLA entering the market in 2020-2024, adding to an existing supply of around 1.46 million sm GLA. The F&B sector has also witnessed continued growth, with an influx of international and local brands planning to either establish or expand their presence in the market, providing further catalyst for the retail sector’s performance.
Despite a marginal slowdown in business activities, key Grade A properties within Jeddah’s office sector have been able to maintain healthy occupancy levels. During 2019, new quality office deliveries included Manart Al Marifah Project, Vision Tower and Rovan Tower, collectively contributing 64,000m2 GLA to the market. There is a continued increase in flight to quality, with the better quality accommodation in prime locations seeing the most positive movement, particularly in the case of locations where flexible lease terms are offered.
Simon Townsend, head of Strategic Advisory at CBRE MENAT and general manager, CBRE KSA, said: “The Kingdom’s real estate sector remains to be one of key drivers of economic development and one of the key catalysts for continued growth. Despite a slight softening in performance, the sector maintains positive sentiment across the retail, office, residential and hospitality landscape. As a consequence, several under construction developments have already secured healthy occupancy levels, having adapted to market demands, whether it be flexibility over sizing, concepts or service offerings. Through Government support, in particular the initiatives to boost the kingdom's economy in line with Vision 2030, we are confident that the sector will grow throughout 2020 and provide a strong base for continued growth thereafter.”
The report also highlights the importance of increased amenities and facilities within residential community developments, with developments now focusing as much on the public realm and social infrastructure as the individual residential offerings. A new trend in residential sector saw the adoption of new construction techniques by developers and contractors with an aim to decrease costs while maintaining quality and efficiency.
This particular trend was showcased recently by completed developments, such as Emaar Residence.
High-end residential properties located along the coast are expected to experience softening in performance, due to increasing supply in this category, with an additional 1,400 residential units scheduled to enter market by 2023.
Jeddah’s hospitality landscape, with an existing 13,900 keys continues to evolve, as the Kingdom welcomed new tourist visa policies. During the Jeddah Season (Jun 1st and July 31st), a footfall of 14.9 million visitors drove the occupancy levels to 75 - 80% in quality developments. By the end of 2019, the city also witnessed the entry of 760 keys from Ibis and Adagio Hotels catering to the affordable to mid-scale segment.