CBRE says that as the city continues to expand to the north, it expects increased activity and the delivery of more projects
About 45,000 homes are expected to be delivered in Jeddah before 2022, adding to the existing supply in Jeddah of 980,000, according to a new report.
CBRE’s 2018 Jeddah Market Snapshot said that new trends are emerging in the market, specifically relating to delivery in residential communities such as J1 and Diyar Al Salam.
CBRE said that as the city continues to expand to the north, it expects increased activity and the delivery of similar projects.
Simon Townsend, head of Strategic Advisory at CBRE MENAT and general manager, CBRE Saudi Arabia, said: “Through the ‘Sakani’ program, the Saudi Government is looking to increase the rate of home ownership among its citizens by 60 percent in 2020 and by 70 percent in 2030.
"These positive initiaitves have generated traction within the market, which has previously seen a slight decline. The total residential supply is currently at around 980,000 units.
"Collaboration between both the public and private sector in the development of affordable housing will be key in attaining government targets,” added Townsend.
The report also said that Jeddah's office sector is witnessing a greater move towards more flexible leasing, while landlords are adding facilities such as F&B and on-site retail to further attract corporate clients.
It added that there is an existing supply of 1.13 million sq m gross leasable area (GLA) in Jeddah, with an additional 0.04 million sq m GLA expected to enter the market by 2022.
Like many major cities regionally, there has been some downward pressures on rental performance with underlying rentals seeing a decline year on year of up to 10 percent.
“To alleviate pressure, landlords need to start adjusting the nature of their offering to cater to the requirements of tenants – these include greater flexibility with respect to lease terms, the addition of alternate facilities, such as F&B, which can act as a catalyst to attract more corporate tenants,” said Townsend.
Jeddah’s retail landscape, with an existing 1.5 million sq m of GLA, continues to evolve, due to the country’s increased focus on its growing entertainment sector, said CBRE.
The report showed a notable move towards malls as leisure destinations, with brands incorporating live music and entertainment offerings. This change in focus and expansion in the retail sector is expected to bring an additional 560,000 sq m of GLA by 2022.