according to the latest City Profile released by Jones Lang LaSalle MENA

Jeddah, 12 June 2011 - Jeddah's real estate market is benefiting from the Saudi government's recently announced 500 billion riyal financial stimulus package and massive public sector infrastructure investments according to Jones Lang LaSalle's latest report 'Jeddah City Profile - June 2011'.

Opportunities abound in Jeddah's residential sector as the market is expected to continuously experience rent and sale price appreciation. An additional 25 million sq m of land offered by the Jeddah Municipality for future large scale residential developments will encourage market activity by mitigating one of the key barriers to development: the high cost of land. Expanding the supply of land available for development can help address inventory and affordability issues to meet the growing housing demand from both the local and expatriate population. The Jeddah market will be further supported by the government's increased spending on housing and the large capital injection into the Real Estate Development Fund (REDF).

Soraka Al-Khatib, Co-Head of Jones Lang LaSalle Saudi Arabia said,

"Already one of the region's best performing economies, Saudi Arabia recently received an additional economic boost from the government's multi-billion riyal financial package. Affordable housing was the largest single component, which reflects the governments prioritisation of housing its young and growing population. Like the rest of Saudi Arabia, Jeddah is particularly well positioned to benefit from this massive flow of public capital into housing and infrastructure. Although this stimulus package will have several wide-ranging implications, one of the most important is establishing structures - like Public Private Partnerships - that facilitate delivery of such large scale, critical projects."

Major highlights:

Over the past six months, the residential market experienced rents and sale price growth, marking evolution of the market cycle. Supported by increasing demand and limited supply growth, rent and price appreciation is expected to continue through 2011.

The office market continues to become more tenant favourable as market competition escalates leading to lower rents and more options available to occupiers.

New supply handovers in the retail market are increasing options for tenants and pushing owners to revise tenant mix and reposition retail asset. Retail rents are expected to remain relatively stable throughout 2011.

The hotel market has witnessed a growth in performance over the past six months, even though occupancy has marginally declined. Driven by rising investment in tourism infrastructure and development of the city's leisure offerings, long term prospects for Jeddah's hotel sector remain positive. 

In the short term, Jeddah's office sector will remain tenant favourable due to existing oversupply and rent declines. Over the next twelve months, supply handovers will push up vacancy across Jeddah and spark relocation demand by tenants seeking to update to higher quality properties in better locations. Consequently, landlords will improve lease concessions like rent free period, flexible payments and other terms to attract occupiers.

Limited expansion of retail supply has led stability of retail rents in Jeddah. In the second half of 2011, significant supply will enter the market sparking greater competition, more attractive rents across a wider variety of assets, and improved lease concessions in the coming years. Retailers will also be encouraged by macroeconomic trends: the government's recent financial stimulus package is boosting consumer spending.

Growth in business travel and domestic tourism will fuel hotel demand in Jeddah. Combined with limited anticipated supply deliveries, strong demand will improve sector performance through 2011. (In terms of room stock, Jeddah ranks behind Makkah and Madinah, but ahead of Riyadh). The expansion of Jeddah's airport, additional infrastructure investment, expansion of the city's leisure offering as well as upgrading of the waterfront areas, will cumulatively have a positive impact on the hospitality sector in the city.

-Ends- 

About Jones Lang LaSalle MENA
Across the Middle East and North Africa, Jones Lang LaSalle is a leading player in the real estate market and hospitality services market. The firm has worked in over 25 Middle Eastern and North African countries and has advised clients on more than US$ 200 billion worth of real estate, hotel and hospitality developments. Jones Lang LaSalle is recognised as having leading real estate and hospitality expertise with a leadership team that has held senior positions with some of the largest real estate developers, hospitality companies and corporate groups both in the Middle East and internationally.

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specialising in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of more than US$ 2.9 billion, Jones Lang LaSalle serves clients in 60 countries from more than 1,000 locations worldwide, including 185 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse in real estate with more than US$ 43 billion of assets under management.

For further information, please visit our website, www.joneslanglasalle-mena.com
Level 4 Suite 406, Jameel Square
Tahliya and Andalus Streets, PO Box 40538 Jeddah 21511
Kingdom of Saudi Arabia

Soraka Al Khatib
+966 50 5610699
soraka.alkhatib@jll.com

© Press Release 2011