While prices for apartments and villas have fallen, sales value has risen significantly in recent times, according to a specialized real estate report, sales prices for apartments and villas in Jeddah fell by 10.1% and 5.1%, respectively, in the third quarter of this year, compared to the same period last year.
Rents for villas and apartments decline
A special report on the performance of the Jeddah real estate market, issued by JLL, a global real estate investment and consulting group, that villa sales rose by more than 11% compared to the second quarter of 2017, while apartment sales fell by 21%.
The report revealed a decline in rents for residential apartments and villas in Jeddah by 9.1% and 4.1%, respectively, in the third quarter of this year, compared to the same period last year, while prices fell slightly compared to the second quarter, by 0.51% and 0.31%, respectively.
812,000 residential units on the market in Jeddah
The report predicted that rents would remain relatively stable, noting that the new restrictions and fees planned for expatriate workers in the Kingdom may limit demand for residential apartments in Jeddah, which would exert downward pressure on rents.
The report noted that the third quarter saw approximately 3,000 residential units enter the market, bringing the total supply of residential units in Jeddah to approximately 812,000 units.
The report projected that 900 rooms would enter the market during the final quarter of the year, as several projects are nearing completion, with a number of mid-range hotels set to open over the next two years, increasing Jeddah’s ability to attract a broad spectrum of visitors.
Decline in occupancy rates in the hotel sector
Occupancy rates in Jeddah’s hotel sector fell by 10% to reach 62% from the beginning of the year through August, compared to 72% during the same period last year.
The average daily rate fell to $258 from the beginning of the year through August, marking a 4.41% decline compared to the same period last year.
The report noted that the hotel sector in Jeddah continues to face some pressures, partly due to a decline in demand from the corporate and institutional segment, while pointing out that the sector remains the best-performing hotel sector in the region, and the outlook for it remains positive.
Increase in office vacancy rates
The report stated that office rents continued to decline compared to last year, falling by 11%, while vacancy rates rose to 14%, as a result of increased supply without a corresponding increase in demand.
The report predicted that the downward trend would continue until the positive impact of the economic reforms implemented by the government is fully realized, suggesting that competition over rental prices will persist, with the balance of power in negotiations tilting toward tenants.
The report noted that the third quarter saw no project completions in the office sector, with the exception of a single small building on Prince Sultan Street, and 51,000 square meters of office space is expected to be completed during the fourth quarter.
