Enhanced infrastructure to boost tourism in Makkah

Progress on major infrastructure enhancements and increased connectivity are expected to boost Makkah’s tourism capacity and create a wave of development opportunities, indicates JLL.

Makkah is undergoing major transformation under Vision 2030, with several government initiatives paving the way for the Holy City to increase its capacity to 30 million pilgrims annually by 2030. The year 2018 witnessed milestone progress with the megaproject Rou’a Al Haram Al Makki announcement, the inauguration of Al Haramain High Speed Railway and soft opening of the new King Abdulaziz International Airport in Jeddah.

The focus on driving connectivity is a Kingdom-wide focus to tap into Saudi Arabia’s potential as a global transport hub with the development of major infrastructure projects providing private and foreign investment opportunities.

“The projected influx of pilgrims supported by a more connected and modernised city is driving positive investor sentiment in Makkah and creating huge development opportunities particularly in the supporting retail and hospitality sectors,” says Dana Salbak, associate at JLL MENA.

The retail sector pipeline is expanding and diversifying to accommodate future tourist demands with major projects in their final phases accounting for a significant share of Makkah’s future supply. Operators are under pressure to create a greater mix of competitive shop-entertainment to cater for the new influx of visitors.

The evolving traveller demographic and tourist influx is stimulating demand and impacting development within the hospitality sector. The city is expected to witness the delivery of 12,300 keys in 2019 and 34,700 keys in 2020, which also represents a more diversified stock as operators adapt their offering to cater for new types of travellers. While 2018 was challenging, the city remains a hot spot for hotel operators looking to enter the market for the first time.

“Despite mixed performance in 2018, the future outlook for Makkah’s real estate market remains positive owing to the significant advancements made by the government to improve and expand the city’s offering,” adds Salbak.