New JLL report says Jeddah office rents dropped further during Q3 as vacancy rates continued to increase
Jeddah's real estate market in Jeddah softened further across most sectors in the third quarter of 2018, according to JLL’s latest market report.
The real estate consultancy said that despite continuing declines in rents and sales prices, ongoing investments in infrastructure and non-oil industries are expected to offset the subdued nature of the market in the long term.
There were no notable residential completions in Q3, JLL said, leaving the total supply relatively stable at 817,000 units.
There were two major completions in the office sector in Q3 adding 1.05 million sq m of space to the market, despite delays in the delivery of other developments, JLL said.
It added that office rents dropped further during Q3 as vacancy rates continued to increase with the new supply.
New transport infrastructure developments in Jeddah are paving the way for a more connected city which could positively impact future office demand, the report noted.
This quarter, the Haramain High Speed Railway completed its first journey and will connect Jeddah, Makkah and Madinah.
“Although the market remained subdued in Q3, the enhanced infrastructure developments towards a more connected city are a step towards attracting increased investment opportunities. The new King Abdul-Aziz International Airport will inaugurate operations in mid-2019, and this completion has the potential to uplift the real estate market performance in Jeddah,” said Dana Salbak, associate, JLL MENA.
The JLL report also showed that the rental and vacancy rates in Jeddah’s retail sector remained unchanged in Q3 as there were no new completions.
However, cinemas, F&B and entertainment options are still the hot topic of shopping centres and will play a greater role in malls performances going forward, it added.
Competition continued to increase in the city's hotel sector in Q3 as two new hotels entered the market. Hotel occupancies continued to decline in the year to August, while average daily rates remained unchanged.
"In the long run, the hotel market is due to witness positive sentiments due to growing developments in the entertainment sector," JLL noted.