Apartment, villa prices down in Jeddah in Q3: JLL

The prices of residential apartments and villas dropped 10 percent and 0.5 percent respectively year-on-year (YoY) in Jeddah in Q3 2017, real estate consultancy JLL said in a market report.

Villa sales rose 1.3 percent quarter-on-quarter (QoQ), while apartment sales retreated 2 percent QoQ.

Apartment and villa rents in Jeddah fell 9 percent and 4 percent respectively YoY, and they decreased marginally by 0.5 percent and 0.3 percent QoQ in Q3 2017.

“Rents are expected to remain relatively stable in 2018 although the recent restrictions (and new fees) on expatriate labor in the Kingdom may reduce demand for apartments in Jeddah, which could place downward pressure on rents,” the report said.

Approximately 3,000 units entered the market in Q3 2017, bringing total residential supply in Jeddah to approximately 812,000 units, JLL said.

Meanwhile, hotel occupancy rates dropped to 62 percent in the first eight months of 2017, a 10 percent decline YoY. Average daily rates also fell to $258 in the year-to-August, a decrease of 4.4 percent YoY.

“The hotel sector in Jeddah remains under pressure, partially due to subdued demand from the corporate segment,” the report said.

However, the outlook for the city’s hospitality market is positive, due to its prime location between Makkah and Madinah, as well as its status as a leisure destination.

A potential 900 keys are expected to enter the Jeddah market in Q4 2017 as several projects are nearing completion, JLL said, adding that a number of mid-range hotels are also expected to open over the next two years.

*estimates

Elsewhere, office rents declined to 11 percent, while vacancies increased to 14 percent in Q3 2017, as a result of new supply outpacing demand.

There were no major completions in the office segment in the third quarter, except for a building in Prince Sultan Street.

However, around 51,000 square meters (sqm) of office space is expected to complete over Q4 2017.