by Kasun Illankoon
The real estate market in Jeddah softened further across most sectors in Q3, revealed JLL’s latest market overview. However, ongoing investments in infrastructure and non-oil industries are expected to offset subdued nature of the market in the long term.
There were two notable completions in the office sector in Q3 bringing the total Gross Leasable Area (GLA) to 1.05 million sq m, despite delays in the delivery of a few developments. As a result, office rents dropped further this quarter as vacancy rates continued to increase with the new supply.
New transport infrastructure developments in Jeddah are paving the way for a more connected city which could positively impact future office demand.
This quarter, the Haramain High Speed Railway completed its first journey from Jeddah’s Al-Sulaymaniyah station celebrating the completion of the largest electric train project in the Middle East. The rail link will aim to connect Jeddah, Makkah and Madinah with improved access to Jeddah’s King Abdul-Aziz International Airport, King Abdullah Economic City and Madinah.
“Although the market remained subdued in Q3, the enhanced infrastructure developments towards a more connected city are a step towards attracting increased investment opportunities. The new King Abdul-Aziz International Airport will inaugurate operations in mid-2019, and this completion has the potential to uplift the real estate market performance in Jeddah,” commented Dana Salbak, Associate, JLL MENA.
There were no notable residential completions in Q3 2018, leaving the total supply relatively stable at 817,000 units. In line with the Ministry of Housing’s (MoH) target of increasing home ownership in Saudi Arabia to 60% by 2020, the ninth installment of the Sakani program was announced in Q3, aiming to deliver 33,000 housing financing options to citizens across the Kingdom.