Makkah Real Estate Market Overview Report – H1 2018
Makkah poised to welcome investment opportunities to boost economic growth
Announced late last year by the Public Investment Fund, Rou’a Al Haram Al Makki will be the latest mega project in Makkah. Spanning 854,000 sq m, the mixed-use development will play an important role in boosting Makkah’s economy, and diversifying the country’s economic base. It is estimated the project will contribute SAR 8 billion (USD 2.1 billion) to national GDP annually once operational. In addition, it will boost the city’s capacity to host pilgrims, contributing to the 2030 Vision’s target of attracting 30 million Umrah pilgrims annually.
The first Makkah Economic Forum (held in May), unveiled eight investment opportunities in the Hajj and Umrah sector with a value of approximately USD 160 million (SAR 600 million) across the two Holy cities of Madinah and Makkah. The opportunities in Makkah include the development of historic sites in Al Noor and Thur Mountains. Additionally, the Ministry of Hajj and Umrah is encouraging SMEs to invest in companies offering Umrah services, and has taken steps to ease bureaucratic processes and improve the business environment to support this initiative.
The Rou’a Al Haram Al Makki development, covering an area of 854,000 sq m located approximately 1,400 meters from the Holy Mosque, will add a further 9,000 residential units to Makkah’s supply pipeline. These units are however not expected to be handed over before 2024 at the earliest. In addition, the project will include 360,000 sq m of commercial space and prayer areas to support over 400,000 worshipers.
Similarly to Jeddah, F&B is becoming an increasingly important component to the retail sector in Makkah. A number of recently completed quality strip retail centres / plazas, offering quality international restaurants and food outlets, have appeared across the city. Their presence is particularly notable within residential areas, indicating that these outlets are primarily targeting the local population.
70,000 hotel rooms are planned as part of the Rou’a Al Haram Al Maki development. While the project is expected to begin construction this year, the first phase will not be operational until 2024. The number of planned keys in this single project is however almost double the current supply in Makkah. With other projects already under construction or announced, the supply of quality hotel rooms (3 stars and above) could increase considerably by 2030. However, delays, cancellations and revisions to developers’ supply pipelines are expected across Makkah’s string of mega projects.