Jeddah market remains subdued, says JLL

July 12, 2017 | By Rupkatha B

Retail in Jeddah sector is experiencing some improvements – boosted by the reinstatement of benefits to public sector staff – but overall the city’s real estate sector has remained ‘relatively subdued’ in the second quarter in Q2 with further declines in performance recorded, states JLL’s Real Estate Market Overview.

“The pace of decline has generally declined suggesting that some sectors are approaching the bottom of their current cycle,” says Jamil Ghaznawi, national director and country head, JLL, KSA. “Market sentiment is expected to improve somewhat later this year.”

Removal of the 20% quota restriction on Hajj pilgrims should see increased demand for both retail and hospitality in Jeddah. Further reforms to energy costs and the general higher cost of living may, however, curb domestic spending compared to historical trends.

There was a minor completion in the office sector over Q2 2017 that saw the GLA of quality office space in Jeddah increase to over 10.7 million sqft. Office rents showed little change quarter-on-quarter (Q-o-Q), but both rents and occupancies showed significant decreases year-on-year (Y-o-Y). There were no notable completions in the residential sector over the second quarter of the year either. The hotel sector witnessed the opening of the Ritz Carlton in Q2 2017 in addition to a completion in the serviced apartment segment with the Staybridge Suites Al Andalus Mall.

More on the Jeddah retail market

While reinstatement of benefits to public sector workers in Q2 is positive news for the retail market, whether or not household spending will return to the same levels as the pre-wage cuts period is still unclear. Although wage levels have been restored, the cost of living remains higher than before, due to the removal of subsidies on utilities and energy costs. The cost of living is also set to increase further with the government considering further revisions to energy costs in 2017, in addition to the recent Sin Tax on tobacco and energy drinks, and the introduction of Value Added Tax (VAT) in January 2018.

Q2 2017 witnessed the completion of the expansion of Red Sea Mall, adding 193,750 sqft of retail GLA to the market. The total stock of quality retail space now stands at approximately 12.92 million sqft. Avenue Mall in North Obhur, 1.2 million sqft, is expected to be the next major completion following Jeddah Park, with this project likely to draw demand from other malls in the northern districts once completed.

Notable scheduled completions in 2017-18 include Jeddah Park, which is in advanced stages of construction and Al Basateen Centre, which is currently under renovation. The number of community and neighbourhood shopping centres in Jeddah is expected to increase as well.

Overall market rents for the retail sector decreased by 2.4% Q-o-Q and 4.3% Y-o-Y. Rents for super-regional shopping centres continued to soften both Q-o-Q and Y-o-Y, decreasing by 3.2% and 7.5%, respectively. Regional shopping centre rents also decreased by 2.3% Q-o-Q and 3.2% Y-o-Y.

Rents may soften further over the year due to upcoming supply entering the market. However, stronger household spending following the reinstatement of public sector wages should curb the impact on rents, meaning rents are likely close to bottoming out.



Previous Article Next Article



Lulu Group partners with Amazon expanding grocery offerings to online customers in the UAE

Abu Dhabi based grocery retail chain Lulu Group has partnered with Amazon 

Continue Reading

November 24, 2022 | By RetailME Bureau
Food Tech Valley partners with Tradeling to boost UAE’s food ecosystem

UAE-government-led initiative Food Tech Valley – announced in 2021 by His Highness 

Continue Reading

November 17, 2022 | By RetailME Bureau
Lulu Hypermarket to open in The Dubai Mall in 2023

Abu Dhabi-based supermarket chain Lulu Hypermarket is all set to open in 

Continue Reading

November 10, 2022 | By Rupkatha B
Beyond Meat’s Q3 2022 results “disappointing”

Plant-based meat brand Beyond Meat’s financial results for the third quarter of 

Continue Reading

November 10, 2022 | By RetailME Bureau
Barakat unveils new biodegradable packaging

UAE’s fresh produce brand Barakat has launched bio-degradable packaging across its entire 

Continue Reading

October 27, 2022 | By RetailME Bureau
Pure Harvest CEO Sky Kurtz

UAE-based agritech start-up Pure Harvest Smart Farms has signed a Memorandum of 

Continue Reading

October 27, 2022 | By RetailME Bureau
Carrefour signed up as anchor tenant for Midtown Project

Carrefour, owned and operated by Majid Al Futtaim – Retail in the 

Continue Reading

October 27, 2022 | By RetailME Bureau
Grandiose Supermarket announces country-wide expansion plans

Grandiose Supermarket, part of Ghassan Aboud Group, has announced expansion plan in 

Continue Reading

October 26, 2022 | By Rupkatha B
100 years of Valrhona

The Valrhona journey began 100 years ago with a cocoa bean. Since 

Continue Reading

October 24, 2022 | By Justina Eitzinger
On-demand grocery delivery in 15 mins

Deliveroo UAE has announced the expansion of its rapid grocery delivery service 

Continue Reading

October 24, 2022 | By RetailME Bureau
Mariam bint Mohammed Almheiri, Minister of Climate Change and Environment

The Ministry of Climate Change and Environment (MOCCAE) revealed that the UAE 

Continue Reading

October 17, 2022 | By RetailME Bureau

Abu Dhabi-based leading supermarket chain Lulu Group has appointed investment bankers Moelis 

Continue Reading

October 13, 2022 | By RetailME Bureau

Download Images RetailME Magazine