Saudi Arabia's affordable housing initiative is driving demand for projects in Jeddah geared towards low to middle-income earners, with a more than twofold increase in the number of contracts year-to-date in May over the same period a year earlier, global consultancy company CBRE said in a report on Sunday.
A total of 58,809 mortgage contracts representing a value of 27 billion Saudi riyals (Dh26bn) were signed in the first five months of the year, according to the real estate report.
“We have seen a number of opportunities consistently arising across all asset classes, with the government’s continued investments reaping rewards as the KSA’s real estate sector grows,” CBRE said.
The Ministry of Housing is implementing a number of affordable residential projects in cities across the kingdom as part of Vision 2030 launched by the government to boost property market, increase home ownership rates among citizens by 60 per cent by 2020 and 70 per cent by 2030 and to meet rising demand.
Separately, Jeddah's hospitality sector experienced high occupancy rates during the Eid period and the Jeddah Season, a 41-day entertainment series of events held in the coastal city. Close to 7,000 tourist visas were issued around Jeddah Season, with hotels in certain areas, such as Al Hamra and Al Shatee reaching 85 per cent to 95 per cent occupancy rates.
The report also said Jeddah's hospitality sector is undergoing massive development with a greater focus on more affordable and mid-scale hotel developments, with an additional 18,000 keys expected in 2020.
The office market remained subdued but witnessed a shift towards more flexible leasing options to spur demand, said CBRE.
There is also an upward trend in demand for co-working spaces where users can share services, amenities and technology in a communal facility.
“In KSA, and Jeddah specifically, companies are seeking flexible office spaces to meet changing business needs. Co-working spaces are also a popular choice among local companies and entrepreneurs seeking flexible office offerings, such as conference rooms and event space which can be rented on an hourly, daily or weekly basis,” according to the report.
Servcorp, Vibes and White Space are a few examples of co-working space companies now capitalising on the demand as they enter the Jeddah market, the report said.
CBRE found malls are reliant on a growing entertainment sector to drive consumer demand.
“Traditional store concepts are taking a back seat as the focus is increasingly placed on developments that offer a full spectrum of facilities, new brands and store options and unique event programming in response to changing consumer demands,” it said.
Mixed-use developments such as Jeddah Gate, Tahlia Park and Lilian Towers have also proven to be a draw to investors as they gain popularity among businesses and visitors, seeking work and lifestyle-focused developments.
"Saudi Arabia's dedication to evolving its entertainment sector is a key driver in stimulating exponential growth across a range of sectors," said Simon Townsend general manager at CBRE, Saudi Arabia.