In efforts to diversify the economy away from oil the government launched tourism giga-projects across the Kingdom and most recently new e-visas for 49 countries to boost international visitor arrivals.JLL said these initiatives and ongoing reforms are set to shape a more diverse hospitality landscape, stimulating real estate development and new investor opportunities.
“With the kingdom opening up to more international tourism there is a positive long-term outlook for the hotel sector in particular, with the pipeline expected to grow in the next 12 months on the back of continued investments in infrastructure and the entertainment and tourism developments,” said Dana Salbak, research director, JLL MENA.Salbak added that evolving tourism demographics are set to have a positive long term impact on the hotel sector. Traditionally driven by religious and domestic travel the hospitality landscape is evolving to attract a wider tourist base with a future pipeline consisting of more luxury hotels and resorts.
“Increased demand for a more diverse hotel pipeline is expected to drive future investments and trigger large-scale real estate development by the public and private sectors. The anticipated influx of international tourists also has the potential to boost spend in the retail and entertainment sectors and stimulate job creation,” she said.During Q3, Riyadh saw occupancy rates improve to 54 percent for the year to August versus 52 percent a year earlier while average daily room rates (ADR) dropped 9 percent.
In Jeddah, hotel occupancy rates declined marginally to register 60 percent while ADR and revenue per available room continued to soften.“We are witnessing an exciting and major turning point for the kingdom’s tourism industry, with new economic reforms opening the doors to leisure and business travelers across the globe. The evolving landscape is stimulating a wave of future investment and development opportunities, driving momentum in the hospitality and wider real estate sector,” said Thierry Delvaux, CEO, JLL, MEA.
JLL's report said in Q3, sale prices and rental rates in the residential sector continued to witness a slowdown, albeit marginally, indicating further signs of the market reaching the bottom of its cycle.However, it added that there is a positive long-term outlook as current dynamics are expected to pick up on the back of housing initiatives tackling the shortage of affordability.
JLL also said that as the kingdom continues to push ahead with giga-projects and encourage private sector participation in the economy, the office market is expected to regain some momentum, particularly high quality Grade A office space with better connectivity and amenities.