LONDON: The long-term outlook for Jeddah’s property market is “positive” despite a 6 to 8 percent drop in sale prices last year, according to a report by KPMG.The Saudi city is expected to receive an additional supply of around 20,000 residential units in 2019–2020, an addition of 2.5 percent to the current stock of about 810,000, the report found.“Despite the current slowdown in the market and subdued performance during the last couple of years, the market drivers seem to be positive for the long term, backed by the favorable demographic, and government’s focus on the real estate sector as part of the diversification process,” said Firas Hassan, head of real estate at KPMG Al Fozan & Partners, the Saudi Arabia-based audit firm that prepared the report.The report pointed to the Saudi government’s aim to increase home ownership from 47 percent to 70 percent by 2030.While Jeddah has a relatively low level of home ownership due to “affordability constraints,” the trend is shifting, the report found.“The market is witnessing a shift in the trend as a proportion of the middle-income housing units are significantly increasing in the forthcoming supply. Most of these developments are located toward the northern side of the city,” said Hassan.The most expensive apartments for sale are located toward the western side, with prices between SR5,000 ($1,333) and SR6,500 per square meter, the report said.“While the demand for apartments and small-sized villas/duplexes is expected to remain high, the residential community concept (semi-gated complexes) is getting market acceptance,” it added.In the retail property sector, KPMG said there were “signs of stability” last year after a period of “subdued performance.”“Jeddah’s retail market is benefiting from a high population base, elevated disposable income, and changing lifestyle. We expect demand for quality retail space to continue rising,” the report found.“However, retail operators need to implement new methods that combine shopping with entertainment to attract more footfalls to their space.”Jeddah’s hospitality market is likely to witness the delivery of more than 4,000 hotel keys in the coming two or three years, which will increase the current hotel stock by 35 percent, the report added.
