Jeddah residential property sector could be poised for a rebound after the decline in rents and sale prices softened during the first quarter, a report from research provider JLL Mena showed.
JLL Mena said that Jeddah’s real estate market such as residential rents and sale prices declined on an annual basis. However, the rate of decline appears to have slowed down over the quarter, indicating the market may be headed towards the bottom of its cycle.
Affordability issues and inadequate access to financing weighed on the demand for Jeddah residential property during the period, resulting in an 11% annual decline in rents for apartments and 12% for villas. Sale prices for apartments and villas, meanwhile, continued to soften by 8% and 7%, respectively, year-on-year.
The three months to March recorded the delivery of approximately 1,660 standalone units, bringing the aggregate supply of residential units in Jeddah to 819,000.
The first quarter saw many developers delay the delivery of their projects as demand remained subdued, JLL Mena said in the report.
Meanwhile, office rents continued to soften as vacancy rates rose due to a slowdown in commercial activity.
JLL Mena added that in the short-to-medium term, they expect rents to continue their downward trajectory as more supply is delivered to the market. In the long-run and as business activity picks up, they can expect to see office rents regain some momentum, particularly for quality grade office buildings.
In terms of location, office buildings along the primary Commercial Business District areas have been and are likely to remain popular.
However, emerging areas with more advanced connectivity and amenities are expected to gain prominence and achieve a premium on office rates.
Retail rental values were steady despite the growth of e-commerce in the kingdom, while hotel occupancy rates maintained their levels as improvements to Jeddah’s infrastructure continue to ease business and religious travel, JLL Mena said.