PHOTO
06 December 2016
JEDDAH: Religious tourism is creating huge opportunities in Makkah for developers and investors to upgrade their existing properties and create new ones, according to JLL, a leading real estate investment and advisory firm.
JLL recently released its first report on ‘Makkah, A City within a City’. The report addresses the trends and opportunities across Makkah’s hotel, office, residential and retail sectors.
JLL signed a memorandum of understanding (MoU) early this year with the Makkah Chamber of Commerce and Industry to help improve transparency in the Saudi real estate market.
As part of the collaboration, JLL worked with key players and stakeholders in Makkah to release this comprehensive report on the city’s real estate market.
The report addresses an almost unlimited global demand for hotel and other tourist facilities in Makkah.
The pace at which the potential growth can be tapped into will rely on overcoming constraints including pilgrim quotas and investments in supporting transport infrastructure.
The Saudi Vision 2030 recognizes the crucial role religious tourism can play in diversifying the economy, with religious pilgrims currently contributing 2 percent to 3 percent of the GDP.
There are plans to roughly double the capacity to accommodate both Umrah and Haj visitors to around 15 million and 5 million respectively by 2020.
The entry of international hotel brands into Makkah continues to reflect market confidence, JLL said. Brands such as Conrad have selected Makkah for their entry into the Saudi market, Marriott and Best Western announcing expansion in the city and Carlson Rezidor entering with a pipeline which includes the Park Inn by Radisson Al Naseem Makkah (2016) and Park Inn by Radisson Aziziyah Makkah (2017).
Jamil Ghaznawi, national director and country head of JLL Saudi Arabia, said: “Increasing religious tourism will create huge opportunities in the retail, hotel and broader accommodation sectors in Makkah.”
He said: “The long-term prospects for the hotel sector are extremely positive, given the reliance on accommodation providers to support the global unlimited demand of religious pilgrims to Makkah.”
Beyond the buoyant hotel and accommodation sector, Makkah’s retail sector is also heavily dependent on trade from religious pilgrims.
Despite this, retail lease rates in the Markazia remain substantially higher than in other parts of the city.
The traditional residential sector continues to suffer from a shortage of affordable homes and poor quality infrastructure projects.
Compared to other major cities in Saudi Arabia, the office sector remains a relatively minor market, which is reflected in lease rates which are considerably lower when compared to Jeddah and Riyadh.
HOTELS: Makkah is by far the largest hospitality market in Saudi Arabia, with around 27,000 quality rooms (compared to 11,000 in Riyadh and 9,400 in Jeddah).
Around 60 percent of the current stock of hotel rooms are classified as ‘budget accommodation’ a much higher proportion than in other cities in Saudi Arabia.
The extreme seasonality of the market has meant that many hotels in Makkah have traditionally only operated during peak months, according to JLL.
With the entry of more international operators, this pattern is now changing, with more hotels operating throughout the year.
Hotels in Makkah typically achieve 100 percent occupancy during the Haj period and the Umrah high season.
The highly seasonal nature of demand results in occupancies falling to just 30 percent to 40 percent during off peak seasons immediately after Ramadan and Haj.
JEDDAH: Religious tourism is creating huge opportunities in Makkah for developers and investors to upgrade their existing properties and create new ones, according to JLL, a leading real estate investment and advisory firm.
JLL recently released its first report on ‘Makkah, A City within a City’. The report addresses the trends and opportunities across Makkah’s hotel, office, residential and retail sectors.
JLL signed a memorandum of understanding (MoU) early this year with the Makkah Chamber of Commerce and Industry to help improve transparency in the Saudi real estate market.
As part of the collaboration, JLL worked with key players and stakeholders in Makkah to release this comprehensive report on the city’s real estate market.
The report addresses an almost unlimited global demand for hotel and other tourist facilities in Makkah.
The pace at which the potential growth can be tapped into will rely on overcoming constraints including pilgrim quotas and investments in supporting transport infrastructure.
The Saudi Vision 2030 recognizes the crucial role religious tourism can play in diversifying the economy, with religious pilgrims currently contributing 2 percent to 3 percent of the GDP.
There are plans to roughly double the capacity to accommodate both Umrah and Haj visitors to around 15 million and 5 million respectively by 2020.
The entry of international hotel brands into Makkah continues to reflect market confidence, JLL said. Brands such as Conrad have selected Makkah for their entry into the Saudi market, Marriott and Best Western announcing expansion in the city and Carlson Rezidor entering with a pipeline which includes the Park Inn by Radisson Al Naseem Makkah (2016) and Park Inn by Radisson Aziziyah Makkah (2017).
Jamil Ghaznawi, national director and country head of JLL Saudi Arabia, said: “Increasing religious tourism will create huge opportunities in the retail, hotel and broader accommodation sectors in Makkah.”
He said: “The long-term prospects for the hotel sector are extremely positive, given the reliance on accommodation providers to support the global unlimited demand of religious pilgrims to Makkah.”
Beyond the buoyant hotel and accommodation sector, Makkah’s retail sector is also heavily dependent on trade from religious pilgrims.
Despite this, retail lease rates in the Markazia remain substantially higher than in other parts of the city.
The traditional residential sector continues to suffer from a shortage of affordable homes and poor quality infrastructure projects.
Compared to other major cities in Saudi Arabia, the office sector remains a relatively minor market, which is reflected in lease rates which are considerably lower when compared to Jeddah and Riyadh.
HOTELS: Makkah is by far the largest hospitality market in Saudi Arabia, with around 27,000 quality rooms (compared to 11,000 in Riyadh and 9,400 in Jeddah).
Around 60 percent of the current stock of hotel rooms are classified as ‘budget accommodation’ a much higher proportion than in other cities in Saudi Arabia.
The extreme seasonality of the market has meant that many hotels in Makkah have traditionally only operated during peak months, according to JLL.
With the entry of more international operators, this pattern is now changing, with more hotels operating throughout the year.
Hotels in Makkah typically achieve 100 percent occupancy during the Haj period and the Umrah high season.
The highly seasonal nature of demand results in occupancies falling to just 30 percent to 40 percent during off peak seasons immediately after Ramadan and Haj.
© Arab News 2016
