By Staff writer
City sees exodus of a large number of expats as the local economy continues to cool, says report
Rental values in Jeddah have slumped in the last three months amid the departure of a large number of expats as the local economy continues to cool because of low oil prices.
JLL's Jeddah Real Estate Market Overview report said rents fell by 9 percent in the first quarter of this year compared to the previous quarter.
"Following the economic slowdown of the market in 2016, and the subsequent departure of a large number of expatriates, the rental market now sees more room for negotiation, forcing the rental values to go down," JLL said in the report.
Q1 saw the completion of Farsi Seven Towers, another addition to the high-rise segment of the market located on Obhur Creek. Further high-rise towers are currently under development or planned along in the Corniche stretch and within the city.
JLL said the total stock of housing in Jeddah at the end of the quarter stood at approximately 806,000 units.
It added that the city's office sector witnessed an increase in office spaces by 23,000 square metres in Q1. Vacancies increased over the quarter due to a combination of factors, including new entrants to the market and supply that was initially withheld in 2016, and softening demand in the market.
“With Vision 2030 in place, and the economy adjusting to lower economic growth, 2017 is set to become a watershed year for the Kingdom’s real estate market,” said Craig Plumb, head of research, JLL, MENA.
“We predict there will be increased activity in the real estate sector through the public investment fund (PIF), the listing of further REITs (Real Estate Investment Trusts), taxation reforms and a series of public private partnerships,” he added.
Jamil Ghaznawi, country head, JLL, Saudi Arabia, said: “Amid toughening economic conditions and the dip in oil prices, there has been positive developments in the office sector in Q1 where the healthcare sector continues to provide viable tenants for office space in Jeddah. An increased number of commercial buildings are leasing to clinics and other healthcare providers.”
The report said total retail supply in Jeddah currently stands at almost 1.2 million sq m. Few announced regional and super-regional shopping centres have begun construction.
"This is encouraging for existing retailers as the delay in project materialisation will soften the potential impact on rents and occupancies," it added.