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Sat 22 Jul 2017 01:09 AM

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Jeddah apartment rents rebound after slump caused by expat exit

Residential sales prices and rents in Saudi city remain relatively stable over the second quarter of 2017

Jeddah apartment rents rebound after slump caused by expat exit

Residential sales prices and rents in Jeddah remained relatively stable over the second quarter of 2017, with apartment rents rebounding following a sharp decline in the first three months of the year.

JLL’s Real Estate Market Overview report showed a 1.4 percent rent rise in Q2 after significant drop in Q1 as a result of departing expatriates.

Sale prices also showed stability in Q2 with both apartment and villa sale prices decreasing marginally by 1.2 percent, the JLL report said.

It added that the expansion of the city towards the north, which has slowed over the last two years, is expected to resume due to the number of large scale developments in North and South Obhur.

The first phase of Al Ra’idah, owned by the Public Pension Agency and located in South Obhur, is currently under construction. This project will deliver approximately 2,500 apartments in the first phase, making it the largest, recent residential completion in Jeddah. The development is predominantly residential, with later phases including close to 4,000 apartments and 1,100 villas.   

The report said total supply of residential units in Jeddah in Q2 stood at approximately 809,000 units.

Expected completions later this year include Gardenia Residence (370 apartments), the latest in a growing number of lifestyle developments.

The city's office market remains soft, with landlords becoming more responsive to the challenging economic environment and reduced demand from the oil and construction sectors by showing greater flexibility when leasing, JLL noted.

Its report added that mid- to long-term prospects for the Jeddah office market have been boosted by the $400 billion in trade deals signed during US President Donald Trump’s visit to Riyadh in May.

Market wide office rents decreased by 9 percent annually while values decreased only marginally on a quarterly basis, which may suggest that rents are now stabilising, JLL added.

Vacancies increased from 7 percent in Q1 to 15 percent in Q2 largely due to the addition of recent completions to the performance basket that have not been absorbed yet.

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