A trend has been spotted in the residential sector of Saudi Arabia’s Jeddah, where the adoption of new construction techniques by developers and contractors – most recently showcased in completed developments such as Emaar Residence – are aiming to decrease costs while maintaining quality and efficiency, according to global real estate consultancy firm CBRE’s H2 2019 Jeddah Market Snapshot report.
The report also talks about the importance of increased amenities and facilities within residential community developments, with developments in Jeddah now focusing as much on the public realm and social infrastructure as on the individual residential offerings.
High-end residential properties located along the coast are expected soften in performance, due to increasing supply in the category, with an additional 1,400 residential units scheduled to enter market by 2023.
Meanwhile, Jeddah’s hospitality landscape, which touts an existing 13,900 keys, has been boosted by the kingdom’s tourist visa policies.
During the Jeddah Season between 1 June and 31 July, 2019, footfall of 14.9 million visitors drove the occupancy levels to 75% to 80% in quality developments.
By the end of 2019, the city also witnessed the entry of 760 keys from Ibis and Adagio Hotels catering to the affordable to mid-scale segment.
In addition, Jeddah’s retail sector is benefitting from the introduction of quality developments featuring entertainment elements. New projects have added approximately 40,000m2 of retail gross leasable area (GLA) to the market.
The CBRE report also highlights that the retail sector will be further boosted with an additional 0.66km2 GLA entering the market in 2020-2024, adding to an existing supply of around 1.46km2 GLA.
Despite a marginal slowdown in business activities, key Grade A properties within Jeddah’s office sector have been able to maintain healthy occupancy levels. During 2019, new quality office deliveries included Manart Al Marifah Project, Vision Tower, and Rovan Tower, collectively contributing 64,000m2 GLA to the market.
There is a continued increase in flight to quality, with the better quality accommodation in prime locations seeing the most positive movement, particularly in the case of locations where flexible lease terms are offered, the report states.
Commenting on the findings, the head of strategic advisory at CBRE MENAT and general manager of CBRE KSA, Simon Townsend, said: “The kingdom’s real estate sector remains to be one of key drivers of economic development and one of the key catalysts for continued growth. Despite a slight softening in performance, the sector maintains positive sentiment across the retail, office, residential and hospitality landscape.”Townsend added: “As a consequence, several under construction developments have already secured healthy occupancy levels, having adapted to market demands, whether it be choosing flexibility over sizing, concepts, or service offerings. Through government support, in particular the initiatives to boost the kingdom's economy in line with Vision 2030, we are confident that the sector will grow throughout 2020 and provide a strong base for continued growth thereafter.”