Villa prices in Jeddah have increased by up to 11% in the first quarter of 2012, signalling that the Saudi real estate market is performing well, to a new study by real consultancy firm Jones Lang LaSalle.
The western area of the Red Sea city saw average rates of around SAR4,600 (US$1,226) per square meter and the capital city Riyadh has also seen prices rise, with average villa prices up to SAR4,200 (US$1,119) per square meter.
Apartment prices are also higher at SAR2,600 (US$693) per square meter and in the office sector, the recent sale of the Eastern Tower in Jeddah has shown there is strong demand.
But the completion of new projects in both cities is likely to see rates start drop in the second half of 2012, JLL says.
The retail market has become more fragmented, with an increasing variation between the rents that can be achieved for line stores in the most popular centres and the average rental value around SAR2,380 (US$634) per square meter, which has remained stable in the first quarter of 2012.
While Riyadh did not see the completion of any new hotel projects, Jeddah has remained one of the strongest performing hotel markets in the Gulf, with occupancy rates of 79%, room rates of SAR770 (US$205) and revenue per available room also on the rise.
‘The residential and hotel sectors of the Jeddah market have so far performed most strongly this year, with continued growth in sale prices, rental levels and occupancies,’ said Soraka Al Khatib, head of JLL’s Jeddah office.
‘In the office and retail markets, the completion of more projects will increase options for tenants during 2012 and will lead to more competitive rental levels being offered to retain and attract tenants,’ Al Khatib added.