By Staff writer
Jeddah residential sale prices fell, while rents soared as new mortgage laws kicked in
New mortgage laws in Saudi Arabia have prompted a shift from owning to renting properties in Jeddah during the fourth quarter of 2014, Jones Lang LaSalle has said.
Its Jeddah Real Estate Overview report said rents rose in the last three months of last year while sale prices fell as more people made the switch.
The report said sale prices have increased ahead of rental rates over the past year, but that trend reversed in the last quarter as average apartment sale prices decreasing by 3.2 percent and rents increased by 9.3 percent.
"Unlike sale prices, the rate of growth in rental rates has actually increased over the past quarter, as the new mortgage regulations have led to a shift from owning to renting," the report noted.
This can be largely attributed to the new mortgage regulations restricting loan-to-value ratios to a maximum of 70 percent, Jones Lang LaSalle added.
Its report also said that the total number of residential units in areas surveyed by JLL stood at 769,000 at the end of 2014, increasing by 15,000 units in the final quarter.
Future supply is expected to grow at a healthy rate over the next three years with a further 77,000 units added by the end of 2017, assuming no delays or cancellations.
Jamil Ghaznawi, country head of JLL KSA, said: “We have witnessed an improvement and a healthy growth among real-estate sectors in Jeddah comparing to Q4 2013. Attractive demographics, new mortgage law, religious tourism with its positive impact on the hospitality segment, and the government’s vast spending on infrastructure are all strong positives for the real estate sector in Jeddah.”
Jones Lang LaSalle said that despite almost 100,000 sq m of office space entering the Jeddah market over the last quarter, vacancy rates remained stable at 6 percent. Average rents are expected to increase further, before peaking later in 2015.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.