Retail: Entertainment and F&B sectors continue to drive footfall in key retail locations
Jeddah: Jeddah’s broadening residential market grows in line with consumer demand according to CBRE’s 2019 Jeddah Market Snapshot.
Government initiatives continue to boost Jeddah’s residential market, with increasing deliveries of residential units targeting lower and middle-income segments. Notable projects meeting a demand for smaller and more affordable units include the recently launched Al Makarona Community and Al Rabwa Residential Complex.
Furthermore, investors and developers are working with the Ministry of Housing (MOH) as part of the Sakani Program to establish additional affordable housing schemes. Some of these key projects include Al Tahlia Gate and Al Jawhara Residence, through which the Saudi government aims to increase home ownership rates among its citizens by 60% by 2020 and 70% by 2030.
Another positive trend in the residential market, is the record increase in residential mortgages for individuals. YTD May 2019 witnessed an increase of 226% in the number of contracts for the same period last year, reaching 58,809 contracts with a value of SAR 27 billion.
Jeddah’s hospitality sector experienced high occupancy rates during the Eid period and the Jeddah Season, benefittingfrom the city’s position as the gateway to the Holy City of Makkah. Saudi officials have announced that close to 7,000 tourist visas were issued around the Jeddah season, with hotels in certain areas, such as Al Hamra and Al Shate’e reaching 85% to 95%
occupancy rates owing to the rising number of tourists. Furthermore, Saudi Arabia’s cabinet has approved electronic visas for foreign visitors to attend sporting events and concerts. The process which will take only a few minutes is expected to further boost Jeddah’s hospitality sector and increase the number of visitors to the city.
In line with the city’s tourism expansion, the Jeddah market has recently witnessed a greater focus on more affordable and midscale hotel developments, with an additional 18,000 keys expected to become operational next year alone.
According to the Market Snapshot, Jeddah’s office market although subdued has cultivated an appetite beyond traditional workspaces. The trend towards a holistic workplace environment is underpinned by the development of F&B and on-site retail to further attract businesses and their employees. To maintain healthy occupancy rates, incorporating enhanced services and amenities as part of the wider office offering is key. The market has also witnessed a shift towards more flexible leasing options, as landlords demonstrate agility in response to market demands and aim to enhance their offering vis-à-vis the competition. Furthermore, there is an upward trend in demand for co-working spaces in which users can share services, amenities and technology in a communal space. In KSA, and Jeddah specifically, companies are seeking flexible office spaces to meet changing business needs. Co-working spaces are also a popular choice amongst local companies and entrepreneurs seeking flexible office offerings, such as conference rooms and event space which can be rented on an hourly, daily or weekly basis. Servcorp, Vibes and White Space are a few examples of the companies now capitalizing on this new demand as they enter the Jedddah market.
Government initiatives to support entrepreneurs, small and medium enterprises through its “Munshaat” program has boded well, and is expected to ultimately boost demand in the overall office market
With retail sales impacted within the super-regional and regional mall categories, a growing entertainment sector is key to driving footfall. The report shows a notable boost towards malls as leisure destinations, with retail spaces incorporating live music and entertainment offerings.
High-quality retail space with innovative concepts are a factor in driving footfall in brick and mortar retail spaces. Traditional store concepts are taking a back seat as the focus is increasingly placed on developments that offer a full spectrum of facilities, new brands and store options and unique event programming in response to changing consumer demands.
Mixed use developments such as Jeddah Gate, Tahlia Park and Lilian Towers have also proven to be a draw to investors as they gain popularity amongst businesses and visitors, seeking work and lifestyle-focused developments.
Simon Townsend, Head of Strategic Advisory at CBRE MENAT and General Manager, CBRE KSA, said: “Saudi Arabia’s dedication to evolving its entertainment sector is a key driver in stimulating exponential growth across a range of sectors. We have seen a number of opportunities consistently arising across all asset classes, with the Government’s continued investments reaping rewards as the KSA’s real estate sector grows.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.ae
© Press Release 2019