At the end of March 2015, analysts and experts began assessing the first quarter of this year, where the real estate market in Jeddah achieved upward growth in the sector represented in the office, residential, commercial and hotel segments, and a report published by JLL Real Estate Consultants indicated that the market has reached its peak, and the report divided the real estate market into four main segments, namely:
Office segment
The report indicates that the price per meter in office residential units has risen from SAR 990 per square meter. While vacancy rates in the office segment stabilized at 6% during the last quarter, due to a limited amount of office space entering the market in the first quarter of 2015, the rental rate of office properties remained unchanged during the first quarter, but increased in the last year by 6.5% to reach SAR 990 per square meter. Rents for premium office residential units continued to rise to SAR 1,900 per square meter, and the report predicted that 108,000 square meters of office space will enter the market during 2015, and this new supply is likely to slow down office rental growth and stabilize average rental rates during 2015.
Rental prices for office properties were unchanged in the first quarter.
Residential segment: The number of housing units currently offered in the city of Jeddah amounted to about 775 thousand housing units, of which 6 thousand housing units were completed during the first quarter of 2015, and sales prices continued to rise, but at lower rates during the first quarter. The report showed that villa prices have increased by 2.5 percent in the past year, and the volume of villa sales transactions has decreased by 59% since the implementation of mortgage regulations in November 2014, while the volume of apartment sales transactions has decreased by 27% during the same period.
Retail segment: Retail vacancy rates declined marginally to 6.8% and are expected to continue declining through the rest of 2015 before stabilizing, due to limited amounts of new supply entering the market during 2015, giving the opportunity to absorb the oversupply in the market, and significant supply of retail space is expected to enter the market in 2016. Retail vacancy rates declined marginally to 6.8% and are expected to continue declining through the rest of 2015 before stabilizing.
Hotel segment:
No new supply entered the market in the past quarter.
