The real estate market in Jeddah is booming thanks to Saudi government’s recent SR500 billion ($133.3 billion) financial stimulus package and massive public sector infrastructure investments, according to property expert Jones Lang LaSalle (JLL).

Opportunities are abound in Jeddah’s residential sector as the market is expected to continuously experience rent and sale price appreciation, the JLL said in its latest ‘Jeddah City Profile – June 2011.’

An additional 25 million sq m of land offered by the Jeddah Municipality for future largescale residential developments will encourage market activity by mitigating one of the key barriers to development: the high cost of land, the report added.

Expanding the supply of land available for development can help address inventory and affordability issues to meet the growing housing demand from both the local and expatriate population, the JLL stated.

The Jeddah market will be further supported by the government’s increased spending on housing and the large capital injection into the Real Estate Development Fund, it added.

Soraka Al-Khatib, co-head of JLL Saudi Arabia said,'Already one of the region’s best performing economies, Saudi recently received an additional economic boost from the government’s multi-billion riyal financial package.'

'Affordable housing was the largest single component, which reflects the governments prioritisation of housing its young and growing population,' he noted.

Like the rest of the Kingdom, Jeddah is particularly well positioned to benefit from this massive flow of public capital into housing and infrastructure, explained Al-Khatib.

'Although this stimulus package will have several wide-ranging implications, one of the most important is establishing structures – like Public Private Partnerships – that facilitate delivery of such large scale, critical projects,' he added.

Commenting on the residential market, the JLL report said that over the past six months, it had experienced rents and sale price growth, marking evolution of the market cycle.

Supported by increasing demand and limited supply growth, rent and price appreciation is expected to continue through 2011, it added.

On the office market scenario, the JLL report said the sector continues to become more tenant favourable as market competition escalates leading to lower rents and more options available to occupiers.

New supply handovers in the retail market are increasing options for tenants and pushing owners to revise tenant mix and reposition retail asset. Retail rents are expected to remain relatively stable throughout 2011, the report pointed out.

On the hotel market, the expert said the sector had witnessed a growth in performance over the past six months, even though occupancy has marginally declined.

Driven by rising investment in tourism infrastructure and development of the city’s leisure offerings, long term prospects for Jeddah’s hotel sector remain positive, the JLL said in its report.

With regard to retail sector, the report pointed out that limited expansion of the retail supply market had led stability of rents in Jeddah.
 
In the second half of 2011, significant supply will enter the market sparking greater competition, more attractive rents across a wider variety of assets, and improved lease concessions in the coming years, the report added.-TradeArabia News Service