Affordable housing purchases in Jeddah more than double, according to CBRE
Saudi Arabia’s affordable housing initiative is driving demand for projects in Jeddah geared to low to middle-income earners.
There has been a more than twofold increase in the number of contracts year-to-date in May over the same period a year earlier, global consultancy CBRE said in a wide-ranging real estate report yesterday.
A total of 58,809 mortgage contracts representing a value of 27 billion Saudi riyals (Dh26bn) were signed in the first five months of the year, according to CBRE.
“We have seen a number of opportunities consistently arising across all asset classes, with the government’s continued investments reaping rewards as the KSA’s real estate sector grows,” CBRE said.
The kingdom’s Ministry of Housing is implementing a number of affordable residential projects in cities across the kingdom as part of Vision 2030 launched by the government to boost the property market, increasing home ownership rates among its citizens by 60 per cent by 2020 and 70 per cent by 2030 to meet rising demand.
Separately Jeddah’s hospitality sector experienced high occupancy rates during the Eid period and the Jeddah Season, a 41-day entertainment series of events held in the coastal city. Close to 7,000 tourist visas were issued around Jeddah Season, with hotels in certain areas, such as Al Hamra and Al Shate’e, reaching 85 per cent to 95 per cent occupancy rates owing to the rising number of tourists.
The report also noted Jeddah’s hospitality sector is undergoing massive development with a greater focus on more affordable and mid-scale hotel developments, with an additional 18,000 keys expected in 2020 alone.
The office market remained subdued but experienced a shift towards more flexible leasing options to spur demand, according to CBRE.
There is also an upward trend in demand for co-working spaces in which users can share services, amenities and technology in a communal space.
“In KSA, and Jeddah specifically, companies are seeking flexible office spaces to meet changing business needs,” CBRE said.
“Co-working spaces are also a popular choice among local companies and entrepreneurs seeking flexible office offerings, such as conference rooms and event space which can be rented on an hourly, daily or weekly basis.”
Servcorp, Vibes and White Space are a few examples of co-working-space companies now capitalising on this new demand as they enter the Jeddah market, the report said.
CBRE found that malls are reliant on a growing entertainment sector to drive consumer demand.
“Traditional store concepts are taking a back seat as the focus is increasingly placed on developments that offer a full spectrum of facilities, new brands and store options and unique event programming in response to changing consumer demands,” it said.
Mixed use developments such as Jeddah Gate, Tahlia Park and Lilian Towers have also proven to be a draw to investors as they gain popularity among businesses and visitors, seeking work and lifestyle-focused developments.
“Saudi Arabia’s dedication to evolving its entertainment sector is a key driver in stimulating exponential growth across a range of sectors,” said Simon Townsend, head of strategic advisory at CBRE Middle East, North Africa, Turkey and general manager, CBRE KSA.