New sectors begin to develop in Jeddah’s real estate market.
The announcement of Jeddah Opera, the development of cinemas and cultural & artistic centres, will see the entertainment and cultural sectors steadily grow in Jeddah over the coming years. Offering opportunities for developers to expand into new sectors.
While delays in the delivery of office buildings continued, there were several completions in Q2 2018. Further completions are expected over the next two quarters as a number of properties near the handover stage. Office rents weakened further over the quarter as vacancies increased, reversing the small improvement seen last quarter.
Following a quiet start to the year, a number of notable residential developments were handed over during Q2 2018, with further completions expected later this year. Residential performances continued to decline across the board, while Q-o-Q performances declined at a slower rate, Y-o-Y performances showed a sharper decline.
There was only one minor addition to the retail sector during Q2 2018, leaving retail supply relatively stable. While further completions are expected later this year, delays have pushed much of this year’s supply to early next year with further delays seemingly likely at this stage. Overall, retail rents remained relatively unchanged over the quarter, but rents in regional shopping centres have declined Y-o-Y. There was some improvement in retail uptake Q-o-Q, but not enough to impact market- wide vacancies.
The expansion of Jeddah’s entertainment and cultural offering bodes well for the hotel sector in the long term. Hotel supply
increased modestly in Q2 2018 with only one hotel opening, but further openings are expected later this year. Despite a
continued decline in overall performance, sentiment in the hotel sector remains fairly optimistic.
In May, Jeddah hosted the Makkah Region Economic Forum under the slogan ‘From vision to performance…invest in Makkah’. Such initiatives aim to create an attractive business environment and stimulate investment within the region in line with the objectives of the Saudi Vision 2030. Jeddah remains the major business centre of the western region and will benefit most from increased office demand resulting from higher levels of investment.
Future communities located north of Obhur Creek will benefit from the planned Obhur Bridge by Jeddah Metro. The proposed 2 km bridge will reduce travel distance between the two sides of the creek by 15 km. This will significantly reduce travel time to major hubs and business centres, which will make the northern suburbs a more desirable destination to live. The Ministry of Transportation invited tenders from the private sector in April although no specific completion date for the project has yet been announced.
The first confirmed permanent cinema in Jeddah will be housed in Red Sea Mall. The cinema will be operated by VOX Cinemas and is now expected to commence operations in Q1 2019. This will be followed by a number of new cinemas as a result of the agreement signed earlier this year between Vue Cinemas and Al Hokair Holding Group, which currently owns five shopping centres across Jeddah with further openings planned.
The General Entertainment Authority has announced plans to develop Jeddah Opera, which will be overseen by the Saudi General Culture Authority. According to the Quality of Life Program released in May, the opera house will be built on the Arts and Culture Island, and is expected to open in 2022. The project is the latest in a series of cultural, leisure and entertainment initiatives in Jeddah. Another project that is currently under development is Hayy, a creative and artistic hub by Art Jameel, due to open in 2019, while the Saudi Commission for Tourism and National Heritage signed a contract in May to develop the King Abdulaziz Museum at Qasr Khozam. The development of these projects is timely, as Saudi formally approved the regulations for issuing tourist visas in April.