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Jeddah property market well positioned for growth
The report covers the office, residential, retail and hospitality market segments of Jeddah.
June 2, 2010 12:51 by Rasha Reslan
Wednesday 2 June 2010 – Despite the impact of the global economic turmoil, disastrous floods and the H1N1 virus, Jeddah will reap the benefits of new public and private investment in the real estate market according to Jones Lang LaSalle’s latest report “Jeddah: Planning for Growth”. This report covers the office, residential, retail and hospitality market segments of Jeddah. Jones Lang LaSalle is a pre-eminent name in the global real estate industry with 180 offices worldwide and has worked in 22 countries in the MENA region on projects worth USD 200 billion and on transactions in excess of USD 1.2 billion.
The residential sector offers the most opportunities. Jeddah accounts for 14% of the national population of Saudi Arabia with around 3.4 million people. While this figure will increase, driven by the young local demographic structure and the continued attraction of expatriate labour, the demand for housing more rapidly than the population; given the faster rate of household formation and improvements in housing affordability.
John Harris, Head of Jones Lang LaSalle in Saudi Arabia said, “The Saudi economy enjoys scale, growth and stability, attributes which have seen it weather the recent economic crisis relatively well. In Jeddah in particular, we have seen a slowdown in property markets. However the medium and long term outlook is very positive with major infrastructure projects working to drive growth alongside investments in the office, residential, retail and hospitality sectors.”
Major highlights included:
• Jeddah is investing heavily to improve its infrastructure. Investment in water, drainage and major transportation projects form the core of the urban renewal initiatives that could significantly change the face of Jeddah over the next 10 years.
• The housing sector remains the most buoyant real estate market at the present time. Developers are shifting interest within this sector to more affordable housing, which will receive a major boost when the long delayed mortgage law is passed.
• The office market continues to move in favour of tenants who are benefiting from more competitive market conditions in the face of an increasing choice of space and more flexible leasing terms.
• There are increasing opportunities for sale and leaseback arrangements as owners seek to free up capital currently tied up in real estate.