The Saudi real estate market has
performed well in the first quarter of 2012, with villa prices in Jeddah
rising by as much as 11 percent, according to a new study by real consultancy
firm Jones Lang LaSalle (JLL).
In the residential sector, villa
prices in Jeddah rose 11 percent in the first three months of the year, with
the western area of the Red Sea city attaining average rates of around SAR4,600 (US$1,226) per
sqm.
Capital Riyadh has also seen an increase,
with average villa prices rising to SAR4,200 (US$1,119) per sqm, with
apartment prices also higher at SAR2,600 (US$693) per sqm.
In the office sector, the recent
sale of the Eastern Tower in Jeddah has shown there is strong demand, but the
completion of new projects in both cities is however likely to see rates start
drop in the second half of 2012, JLL predicted.
The retail market has become more
fragmented, with an increasing variation between the rents that can be achieved
for line stores in the most popular centres and the average rental value
(around SAR2,380 [US$634] sqm), which has remained stable in the first
quarter of 2012.
While Riyadh did not see the
completion of any new hotel projects, Jeddah has remained one of the strongest
performing hotel markets in the Gulf, with occupancy rates of 79 percent, room
rates of SAR770 (US$205) and revenue per available room (RevPAR) also on the
rise.
“The residential and hotel
sectors of the Jeddah market have so far performed most strongly this year,
with continued growth in sale prices, rental levels and occupancies. In the
office and retail markets, the completion of more projects will increase
options for tenants during 2012 and will lead to more competitive rental levels
being offered to retain and attract tenants,” said Soraka Al Khatib, head of
JLL’s Jeddah office.
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