Saudi Gazette report MAKKAH — Realtors said they do not expect the decline in rent rates in Makkah to affect future investments in pilgrims' accommodations. They said the decline will not last more than three years and was caused by the reduction in pilgrim quotas. This reduction was caused by ongoing expansion work at the Grand Mosque. They pointed out that rents have decreased by an average of 30 to 40 percent. Awadh Al-Ahmadi, member of the realtors committee at the Makkah Chamber of Commerce, said after the expansion work at the Grand Mosque is completed, the number of Haj and Umrah pilgrims is expected to reach 5 and 10 million respectively. He said these large numbers of pilgrims will increase occupancy rates. He expected the next two years to witness an increase in residential projects to accommodate the expected increase in pilgrim numbers. The executive manager of Al-Dhebaiban Real Estate company, Thamer Al-Dhebaiban, said the Saudi government decided to reduce the number of domestic pilgrims by 50 percent and foreign pilgrims by 20 percent. He said this was a temporary measure until expansion work at the Grand Mosque is completed in three years time. This decision was taken to alleviate overcrowding in the Grand Mosque and maintain their safety, he said. Al-Dhebaiban said this decision will affect all commercial and economic activities, as many businesses await the Haj season every year because it is considered a main source of their income. He said many pilgrim service providers have canceled contracts with the owners of pilgrims' accommodation buildings. Al-Dhebaiban said his company expected rents in their accommodation sector to decline by 30 percent. Many businesses pay high rent for shops during the Haj season and will not be able to meet these payments, he claimed. He said some locations around the Grand Mosque that depend on income cost between SR5,000 to SR12,000 a square meter. These locations depend on income from pilgrims who are less in numbers this year. Many will not be able to pay these rents and have asked for them to be reduced until pilgrims numbers return to normal. Al-Dhebaiban said many businesses have let go about 30 percent of their temporary workers. He said, however, this recession will not continue and that the residential sector will have a bright future. The government's development project to remove slum areas around the Grand Mosque will also add to the expected increase in demand for accommodation.
