Saudi Gazette report JEDDAH – The Bride of the Red Sea is likely to offer more real estate growth in the shorter term thanks to its location, according to an official of a commercial real estate services and investment firm. Population estimates for Jeddah indicate a current population of four million and growth is running at close to 3% per annum, presenting opportunities in all real estate sectors, said CBRE's Middle East Director Steve Mayes, who has done a comprehensive analysis on the outlook for the Saudi real estate market. The private sector continues to thrive in Jeddah, focused mainly on the upper end of the residential spectrum in prime locations such as Jeddah Corniche, as witnessed by Damac Properties' Versace branded, 47-story Al-Jawharah project, which sold out prior to practical completion. Drivers that are unique to the Kingdom, such as Haj and Umrah pilgrims to Makkah and Madinah create real estate opportunities in the hospitality, retail and residential sectors, according to Mayes. Currently, approximately 7.7 million pilgrims visit the two holy cities. This is predicted to rise to 13.75 million by 2019. Major projects under development include the expansion of Jeddah's King Abdulaziz International Airport, increasing its annual capacity to 80 million and Madinah airport's capacity to 14 million by 2030. The Haramain high-speed railway linking Makkah, Madinah and Jeddah is expected to lead to the delivery of some 50,000 additional hotel rooms, which are already in the development pipeline. Foremost amongst real estate developments in Makkah is Jabal Omar, which is set to deliver more than 10,000 hotel rooms; Jabal Khandamah with over 600,000m² of built up area; and King Abdulaziz Road stretching some 3.5 km. Madinah's master plan includes the $8 billion Knowledge Economic City covering 480 hectares, delivering 8 million square meters of real estate and a predicted population of 150,000. The announcement by the Saudi Industrial Property Authority (MODON) that the 3rd Industrial City in Jeddah, covering 80 million m² and financed to the tune of $193 million, promises growth in the industrial sector, said Mayes. He said that Riyadh, with approximately six million residents, presents some of the most obvious opportunities and challenges. Demand for expatriate housing is set to increase as international contractors ramp up personnel head count to deliver infrastructure projects, such as the Riyadh Metro. Only 6,000 expatriate units are set for delivery in the shorter term, which will do little to address demand/supply imbalances in the city, according to Mayes. The Riyadh Development Authority is also releasing SR278 billion for housing and infrastructure projects. Government housing looks set to drive growth and the Ministry of Housing reports that 110,000 residential units are currently under construction. Strong demand from Saudi nationals and the expatriate community has driven rental rate growth by 15% year-on-year. The expected delivery of residential units may slow the pace of rental growth.
