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Jeddah's property market offers huge potential

Jeddah's property market offers huge potential - Egypt - Real Estate - Market

Jeddah's residential sector has been marked with growing demand resulting to acceleration of sales and rental prices in the recent past, according to Colliers International's GCC Real Estate Q2, 2009 Overview released recently.

Rental and sales prices in the city have been reported at an average growth of 30 percent YoY until Q3 of 2008. With sustained demand and weak supply, absorption of housing units has been fast with most projects in Jeddah having 50 percent of their units sold prior to completion of construction.

As of Q1 of 2009, average sales price of residential units as part of multi-tiered residential developments reached $2,300 per sq. m. Meanwhile, the rental market saw considerable activity and growth last year on the back of a rising expatriate population and shortage of supply. As of Q1, 2009, lease rates in Jeddah reached an average of $62 per sq. m. per annum.

Decline in construction costs and present market conditions have precipitated land prices to contract together with the softening of rental and sales prices of residential units. Rental rates in Jeddah have declined by 5 percent and sales prices by 15 percent on average.

"With no clear indication as to the implementation of the mortgage law, developers continue to show bias on developing mid to high end residential units while demand for low-cost housing remains unmet", Emad Damrah of Colliers International said.

Meanwhile, Jeddah's office sector is still marked by a shortage of supply. "We have seen a shift in favor of more prestigious, higher quality accommodation in line with regional trends. Investors are currently trying to lock in waterfront properties as the city gears itself for anticipated increased flow of FDI (foreign direct investment) creating a shift toward building primary grade office space," said Damrah.

Secondary grade office space occupancy rates stood at 90 percent, while Class A occupancy levels were at an average of 97 percent as of Q1, 2009," Damrah added. Uptake of office space recently delivered in the market has been swift indicating a robust demand in the market.


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