Q2 2016 - JLL MENA
JEDDAH REAL ESTATE MARKET OVERVIEW
Q2 2016
JEDDAH MARKET SUMMARY Slow down in performance amid further project completions.
The combined effect of the economic slowdown and the entry of a number of completions stabilized office performance rates in Q2.
Villa and apartment sale prices have decreased compared to the previous year. While apartment rents continue to grow but at a slower rate.
Hotel vacancies decreased in Q2 but ADRs suffered less as the market appears close to bottom of its current cycle. Two hotel openings in Q2 provides positive news for project materialisation, but increased supply will create more competition amongst quality hotels.
Although further eff orts have been made towards addressing the shortage of affordable housing, a number of major projects (including those by Eskan and Salman Bay Housing) continue to experience delays.
With new supply entering the market over the last two quarters, retail rents remained stable in Q2. Although vacancy rat es decreased over the quarter, placing market
conditions in favor of landlords, the large amount of future supply and weaker demand (evidenced by the decline of POS transactions) is likely to keep rents stable for the time being. The easing of foreign investment into KSA, in accordance with the Saudi Vision 2030, is likely to support the performance of the retail sector in the long term. The diversification of the economy outlined in the 2030 Vision for KSA should have a positive impact on the Jeddah real estate over the longer term.
JEDDAH PRIME RENTAL CLOCK
RENTAL GROWTH SLOWING
RENTS FALLING
RENTAL GROWTH SLOWING
Q2 2015
RENTAL GROWTH ACCELERATING
RENTS FALLING
Q2 2016
RENTS BOTTOMING OUT
OFFICE
RENTAL GROWTH ACCELERATING
RESIDENTIAL
RETAIL
RENTS BOTTOMING OUT
HOTEL*
* Hotel clock reflects the movement of RevPAR Note: The property clock is a graphical tool developed by JLL to illustrate where a market sits within its individual rental cycle. These positions are not necessarily representative of investment or development market prospects. It is important to recognise that markets move at different speeds depending on their maturity, size and economic conditions. Markets will not always move in a clockwise direction, they might move backwards or remain at the same point in their cycle for extended periods. Source: JLL COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
JEDDAH OFFICE MARKET SUMMARY SUPPLY Two office buildings entered the market in Q2: Al Amoudi Tower on Madinah Road and DARA Centre on Prince Sultan Street. The two buildings added just over 11,000 sq m of office space into the market bringing the total supply of office space to approximately 937,000 sq m. Emaar Square (24,000 sq m) is expected to complete later this year, the largest addition of quality office space since the Headquarters Business Park which added 75,000 sq m to the market in 2014.
HOT TOPIC Tenant downsizing: Some occupiers working on major infrastructure and construction projects such as the Haramain railway and the city sewage system, have downsized their operations and vacated space as these projects near completion.
PERFORMANCE The economic slowdown has ended the recent period of rental growth in the Jeddah office market. While average rents remained stable this quarter at SAR1,123,sq m. they have decreased marginally (by 1.5% over the past year). The vacancy rate has increased marginally (by 1% ) over Q2 to reach 6%, while Y-o-Y vacancies have remained stable.
Flight to quality: A number of tenants are talking advantage of softer market conditions to upgrade to better quality office space offering up to date facilities, Saudi Vision 2030: was announced in Apr il with a focus on economic diversification and attracting foreign investment. While unlikely to have a major immediate impact, this should increase demand for office space in Jeddah over the longer term as the market has traditionally relied on the construction and government sectors for demand.
OFFICE SUPPLY
CURRENT SUPPLY (2013–Q2 2016)
FUTURE SUPPLY (H2 2016–2018)
95K SQ M (GLA)
99K SQ M (GLA)
96K SQ M (GLA)
SQ M (GLA)
742K
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
937K
1,033K
1,132K
2013
2014
2015
Q2 2016
H2 2016
2017
2018
853K
892K
937K
SQ M (GLA)
SQ M (GLA)
OFFICE PERFORMANCE
VACANCY RATE
6%
AVERAGE RENTS (PER SQ M)
6% 1,140
1,123
SAR
SAR
-2% Q2 2015
Q2 2016
Q2 2015
Y-O-Y
Q2 2016
2016 / 2017
2016 / 2017
OUTLOOK
OUTLOOK / ANNUAL CHANGE
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
JEDDAH RESIDENTIAL MARKET SUMMARY SUPPLY There have been no notable completions in Q2, with total supply remaining at approximately 796,000 residential units. The second half of the year is expected to see the completion of Abraj Al Hilal 2. A number of planned large scale residential developments, (eg Salman Bay), which were expected to enter the market in 2017, have now been delayed to 2018.
HOT TOPIC White Land Tax: the release of regulations in June represents a positive move that should spur further residential development as landowners and developers seek to avoid the tax burden. The expected increase in supply should also help lower land costs and the cost of housing in 2017 / 2018.
PERFORMANCE There was very little change in either rentals or sale prices in Q2 with rentals for both apartments and villas increasing by just 1%. Over the past year, rentals for villas increased by 2.5%, while apartment rents continued to increase, but at a slower pace of 4% .
Increasing the LVR: from 70% to 85% has yet to spur demand for residential sales as sale prices have continued to fall and demand remains soft. Data from the Ministry of Justice shows a decrease of almost 9% in the number of residential transactions YT May.
Sale prices continued to decline marginally over the quarter (by 1% for villas and 2.3% for apartments). Y-o-Y villa and apartment sale prices decreased at around the same rate of 4% and -5% respectively.
RESIDENTIAL SUPPLY
CURRENT SUPPLY (2013–Q2 2016)
FUTURE SUPPLY (H2 2016–2018)
14K UNITS UNITS UNITS 15K UNITS
9K
UNITS UNITS
754K
769K
789K
796K
796K
805K
819K
2013
2014
2015
Q2 2016
H2 2016
2017
2018
UNITS
UNITS
UNITS
UNITS
UNITS
UNITS
RESIDENTIAL PERFORMANCE APARTMENTS
RENTALS
Q-O-Q
Q-O-Q
SALES Y-O-Y
-5%
SOURCE: JLL
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
RENT AND SALE PRICES
SALES
-2.3%
UNITS
VILLAS
SALES
RENTALS
Q-O-Q
Q-O-Q
RENTALS
SALES
RENTALS
Y-O-Y
Y-O-Y
Y-O-Y
1%
4%
-1%
-4%
SOURCE: JLL
1%
2.5%
JEDDAH RETAIL MARKET SUMMARY SUPPLY A total of 14,000 sq m entered the market in Q2 with the expansion of the Alandalus Mall. A further 42,000 sq m of retail space is due for completion in 2016, including the 20,000 sq m expansion of the existing Red Sea Mall. Most of the future supply is located in the East, West and North of the city away from the traditional shopping district of Tahlia Street, with the exception of Jeddah Park.
HOT TOPIC Less restrictions on foreign investment: The Council of Ministers approved the relaxation of foreign ownership controls from 75% to 100% of retail businesses in June.
PERFORMANCE Retail rents have seen little change during Q2, falling by less than 1% in both regional and super regional centres. Over the year, super regional and regional centres have seen rental increases of 15% and 5% respectively. Vacancies have decreased over Q2 to approximately 7%, as new supply continues to be absorbed.
This announcement is in line with the Saudi 2030 Vision to increase foreign investment in the Kingdom. The first license, was issued under the new regulations in June to Dow Chemicals. Easier entry should encourage more international retailers to enter the market, which will assist in absorbing the upcoming supply. Point of sales transactions: according to the latest data from SAMA, the number of point of sales transactions (POS) decreased by around 1% Q-o-Q, and the value of point of sales decreased by almost 7%.
RETAIL SUPPLY
CURRENT SUPPLY (2013–Q2 2016)
FUTURE SUPPLY* (H2 2016–2018)
142K SQ M (GLA)
166K SQ M (GLA)
42K
SQ M (GLA)
SQ M (GLA)
979K
1.06M
1.07M
1.15M
1.15M
1.19M
1.36M
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
2013
2014
2015
Q2 2016
H2 2016
2017
2018
RETAIL PERFORMANCE
VACANCY RATE
7%
CHANGE IN AVERAGE RENTS
7% -1% Q-O-Q
Q2 2015
Q2 2016
15%
-1%
Y-O-Y
5%
Q-O-Q
SUPER REGIONAL
Y-O-Y
REGIONAL
2016 / 2017
2016 / 2017
OUTLOOK
OUTLOOK
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
JEDDAH HOTEL MARKET SUMMARY
HOT TOPIC
PERFORMANCE YT May occupancy rates have decreased by around 5% to 69% when compared to the same period last year.
SUPPLY The second quarter of 2016 saw the opening of the Sofitel Corniche (191 keys), formerly the Westin Hotel, and the Ramada Corniche (165 keys) in the midscale segment.
ADRs have suffered less and maintained their levels slightly above USD 240 over the first five months of the year, reinforcing Jeddah’s position as the most expensive market in the Region.
These completions bring the total supply to approximately 9,000 keys, with around 1,500 hotel rooms. Scheduled to complete later in the year
Increased competition: A significant amount of new supply has opened over the past 18 months, attracted by the strong performance of the Jeddah market. Most of these new entrants are concentrated in the 5 star category; increasing competition in the upscale segment where product differentiation will become an increasingly crucial success factor. The serviced apartment sector has experienced significant growth in Jeddah with Ascott opening three properties within a few months. This brings higher quality supply to a market that previously comprised mostly unbranded and locally managed properties.
HOTEL SUPPLY
CURRENT SUPPLY (2013–Q2 2016)
FUTURE SUPPLY (H2 2016–2018)
1,100 KEYS
1,300 KEYS
1,500 KEYS
7,300
8,500
8,600
9,000
9,000
10,500
11,800
2013
2014
2015
Q2 2016
H2 2016
2017
2018
KEYS
KEYS
KEYS
KEYS
KEYS
KEYS
KEYS
HOTEL PERFORMANCE
OCCUPANCY RATE
74%
AVERAGE DAILY RATE
69% 242
241
USD
USD
-1% YT MAY 2015
YT MAY 2016
YT MAY 2015
Y-O-Y
2016 / 2017
2016 / 2017
OUTLOOK
OUTLOOK / ANNUAL CHANGE
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
YT MAY 2016
DEFINITIONS AND METHODOLOGY
12 o’clock indicatesa turning point towards a market consolidation / slowdown. At this position, the market has no further rental growth potential left in the current cycle, with the next move likely to be downwards.
3 o’ clock indicates the market has reached its point of fastest decline. While rents may continue to decline for some time, the rate of decrease is expected to slow as the market moves towards a period of rental stabilisation.
6 o’clock indicates a turning point towards rental growth. At this position, we believe the market has reached its lowest point and the next movement in rents is likely to be upwards.
9 o’clock indicates the market has reached the rental growth peak, while rents may continue to increase over coming quarters the market is heading towards a period of rental stabilisation.
OFFICE
RESIDENTIAL
Supply data is b ased on our qu arterly survey of the Grade A & B office space located in the Jeddah CBD, defined as Prince Sultan, Tahlia, Al-Malek, Ibrahim Al Juffali, Amanah Street, Madinah, King Abdullah & Prince Saud AlFaisal (Rawdah) Streets.
The supply data is based o n the Nationa l Housin g Census (20 10) and our qu arterly survey of major projects and stand alo ne developments in selected areas.
Completed bu ildi ng refers to a buildin g that is handed over for immediate occupation. Prime Office Rent represents the top ope n-market rent that could be expected for a notional office unit of the highest quality and specification in the best location in a market, as at the survey date (normally at the end of e ach quarter). The Prime Rent reflects an occupationa l lease that is standard for the local market. It is a face rent that does not reflect the financial impact of tenant incentives, and excludes service charges and local taxes.
Completed bu ildi ng refers to a buildin g that is handed over for immediate occupation. Residentia l performance data is based on two separate baskets one for rentals in villas and ap artments and another basket for sales performance for both villas and apartments. The two baskets cover projects in selected locations across Jeddah.
Office vacancy rates are based on JLL estimates for a basket of buildings that comprises approx. 60% of the current supply.
RETAIL
HOTEL
Classification of Retail Centres is based upon the ULI definition and based on their GLA: • Super Regional Malls have a GLA of above 90,000 sq m • Regional Malls have a GLA of 30,000 - 90,000 sq m • Community Malls have a GLA of 10,000 - 30,000 sq m • Neighbourhood Malls have a GLA of 3,000 - 10,000 sq m • Convenience Malls have a GLA of less than 3,000 sq m
JLL tracks the supply of 3, 4 and 5 star quality hotels. The supply data excludes serviced apartments. Performance data is based on a monthly survey cond ucted by STR Global.
Average Rent Shoppi ng Centre represe nts the quoted average rents for line shops for the major shoppin g malls in Jedd ah. Retail supply relates to the Gross Lettable Area (GLA) within reta il malls. Vacancy rate is base d on estimates from the JLL Retail team, in addition to data rece ived from the Shoppi ng Centre Committee of the Jeddah C hamber of Commerce a nd Industry, and repr esents the average rate across standard in line un it shops at regiona l malls. COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
Jeddah Jameel Square Level 2, Suite 209 Tahliya and Andalus Streets PO Box 2091 Jeddah 8909 – 23326 Saudi Arabia Tel: +966 12 660 2555 Fax: +966 12 669 4030
For questions and inquires about the Jeddah real estate market, please contact: Jamil Ghaznawi Country Head KSA [email protected]
Dana Williamson Head of Agency MENA [email protected]
Andrew Williamson Head of Retail MENA [email protected]
Craig Plumb Head of Research MENA [email protected]
Fayyaz Ahmad Director, Advisory KSA [email protected]
Ahmed Almihdar Senior Analyst KSA [email protected]
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Mohammad Alajmi Analyst KSA [email protected]
joneslanglasalleblog.com/EMEAResearch
Jll-mena.com © 2016 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in t his document is proprietary to Jones Lang LaSalle and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of Jones Lang LaSalle and shall be kept confidential. Reproduction of any part of this document is authorised only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorisation of Jones Lang LaSalle. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof.
Q2 2016
JEDDAH MARKET SUMMARY Slow down in performance amid further project completions.
The combined effect of the economic slowdown and the entry of a number of completions stabilized office performance rates in Q2.
Villa and apartment sale prices have decreased compared to the previous year. While apartment rents continue to grow but at a slower rate.
Hotel vacancies decreased in Q2 but ADRs suffered less as the market appears close to bottom of its current cycle. Two hotel openings in Q2 provides positive news for project materialisation, but increased supply will create more competition amongst quality hotels.
Although further eff orts have been made towards addressing the shortage of affordable housing, a number of major projects (including those by Eskan and Salman Bay Housing) continue to experience delays.
With new supply entering the market over the last two quarters, retail rents remained stable in Q2. Although vacancy rat es decreased over the quarter, placing market
conditions in favor of landlords, the large amount of future supply and weaker demand (evidenced by the decline of POS transactions) is likely to keep rents stable for the time being. The easing of foreign investment into KSA, in accordance with the Saudi Vision 2030, is likely to support the performance of the retail sector in the long term. The diversification of the economy outlined in the 2030 Vision for KSA should have a positive impact on the Jeddah real estate over the longer term.
JEDDAH PRIME RENTAL CLOCK
RENTAL GROWTH SLOWING
RENTS FALLING
RENTAL GROWTH SLOWING
Q2 2015
RENTAL GROWTH ACCELERATING
RENTS FALLING
Q2 2016
RENTS BOTTOMING OUT
OFFICE
RENTAL GROWTH ACCELERATING
RESIDENTIAL
RETAIL
RENTS BOTTOMING OUT
HOTEL*
* Hotel clock reflects the movement of RevPAR Note: The property clock is a graphical tool developed by JLL to illustrate where a market sits within its individual rental cycle. These positions are not necessarily representative of investment or development market prospects. It is important to recognise that markets move at different speeds depending on their maturity, size and economic conditions. Markets will not always move in a clockwise direction, they might move backwards or remain at the same point in their cycle for extended periods. Source: JLL COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
JEDDAH OFFICE MARKET SUMMARY SUPPLY Two office buildings entered the market in Q2: Al Amoudi Tower on Madinah Road and DARA Centre on Prince Sultan Street. The two buildings added just over 11,000 sq m of office space into the market bringing the total supply of office space to approximately 937,000 sq m. Emaar Square (24,000 sq m) is expected to complete later this year, the largest addition of quality office space since the Headquarters Business Park which added 75,000 sq m to the market in 2014.
HOT TOPIC Tenant downsizing: Some occupiers working on major infrastructure and construction projects such as the Haramain railway and the city sewage system, have downsized their operations and vacated space as these projects near completion.
PERFORMANCE The economic slowdown has ended the recent period of rental growth in the Jeddah office market. While average rents remained stable this quarter at SAR1,123,sq m. they have decreased marginally (by 1.5% over the past year). The vacancy rate has increased marginally (by 1% ) over Q2 to reach 6%, while Y-o-Y vacancies have remained stable.
Flight to quality: A number of tenants are talking advantage of softer market conditions to upgrade to better quality office space offering up to date facilities, Saudi Vision 2030: was announced in Apr il with a focus on economic diversification and attracting foreign investment. While unlikely to have a major immediate impact, this should increase demand for office space in Jeddah over the longer term as the market has traditionally relied on the construction and government sectors for demand.
OFFICE SUPPLY
CURRENT SUPPLY (2013–Q2 2016)
FUTURE SUPPLY (H2 2016–2018)
95K SQ M (GLA)
99K SQ M (GLA)
96K SQ M (GLA)
SQ M (GLA)
742K
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
937K
1,033K
1,132K
2013
2014
2015
Q2 2016
H2 2016
2017
2018
853K
892K
937K
SQ M (GLA)
SQ M (GLA)
OFFICE PERFORMANCE
VACANCY RATE
6%
AVERAGE RENTS (PER SQ M)
6% 1,140
1,123
SAR
SAR
-2% Q2 2015
Q2 2016
Q2 2015
Y-O-Y
Q2 2016
2016 / 2017
2016 / 2017
OUTLOOK
OUTLOOK / ANNUAL CHANGE
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
JEDDAH RESIDENTIAL MARKET SUMMARY SUPPLY There have been no notable completions in Q2, with total supply remaining at approximately 796,000 residential units. The second half of the year is expected to see the completion of Abraj Al Hilal 2. A number of planned large scale residential developments, (eg Salman Bay), which were expected to enter the market in 2017, have now been delayed to 2018.
HOT TOPIC White Land Tax: the release of regulations in June represents a positive move that should spur further residential development as landowners and developers seek to avoid the tax burden. The expected increase in supply should also help lower land costs and the cost of housing in 2017 / 2018.
PERFORMANCE There was very little change in either rentals or sale prices in Q2 with rentals for both apartments and villas increasing by just 1%. Over the past year, rentals for villas increased by 2.5%, while apartment rents continued to increase, but at a slower pace of 4% .
Increasing the LVR: from 70% to 85% has yet to spur demand for residential sales as sale prices have continued to fall and demand remains soft. Data from the Ministry of Justice shows a decrease of almost 9% in the number of residential transactions YT May.
Sale prices continued to decline marginally over the quarter (by 1% for villas and 2.3% for apartments). Y-o-Y villa and apartment sale prices decreased at around the same rate of 4% and -5% respectively.
RESIDENTIAL SUPPLY
CURRENT SUPPLY (2013–Q2 2016)
FUTURE SUPPLY (H2 2016–2018)
14K UNITS UNITS UNITS 15K UNITS
9K
UNITS UNITS
754K
769K
789K
796K
796K
805K
819K
2013
2014
2015
Q2 2016
H2 2016
2017
2018
UNITS
UNITS
UNITS
UNITS
UNITS
UNITS
RESIDENTIAL PERFORMANCE APARTMENTS
RENTALS
Q-O-Q
Q-O-Q
SALES Y-O-Y
-5%
SOURCE: JLL
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
RENT AND SALE PRICES
SALES
-2.3%
UNITS
VILLAS
SALES
RENTALS
Q-O-Q
Q-O-Q
RENTALS
SALES
RENTALS
Y-O-Y
Y-O-Y
Y-O-Y
1%
4%
-1%
-4%
SOURCE: JLL
1%
2.5%
JEDDAH RETAIL MARKET SUMMARY SUPPLY A total of 14,000 sq m entered the market in Q2 with the expansion of the Alandalus Mall. A further 42,000 sq m of retail space is due for completion in 2016, including the 20,000 sq m expansion of the existing Red Sea Mall. Most of the future supply is located in the East, West and North of the city away from the traditional shopping district of Tahlia Street, with the exception of Jeddah Park.
HOT TOPIC Less restrictions on foreign investment: The Council of Ministers approved the relaxation of foreign ownership controls from 75% to 100% of retail businesses in June.
PERFORMANCE Retail rents have seen little change during Q2, falling by less than 1% in both regional and super regional centres. Over the year, super regional and regional centres have seen rental increases of 15% and 5% respectively. Vacancies have decreased over Q2 to approximately 7%, as new supply continues to be absorbed.
This announcement is in line with the Saudi 2030 Vision to increase foreign investment in the Kingdom. The first license, was issued under the new regulations in June to Dow Chemicals. Easier entry should encourage more international retailers to enter the market, which will assist in absorbing the upcoming supply. Point of sales transactions: according to the latest data from SAMA, the number of point of sales transactions (POS) decreased by around 1% Q-o-Q, and the value of point of sales decreased by almost 7%.
RETAIL SUPPLY
CURRENT SUPPLY (2013–Q2 2016)
FUTURE SUPPLY* (H2 2016–2018)
142K SQ M (GLA)
166K SQ M (GLA)
42K
SQ M (GLA)
SQ M (GLA)
979K
1.06M
1.07M
1.15M
1.15M
1.19M
1.36M
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
SQ M (GLA)
2013
2014
2015
Q2 2016
H2 2016
2017
2018
RETAIL PERFORMANCE
VACANCY RATE
7%
CHANGE IN AVERAGE RENTS
7% -1% Q-O-Q
Q2 2015
Q2 2016
15%
-1%
Y-O-Y
5%
Q-O-Q
SUPER REGIONAL
Y-O-Y
REGIONAL
2016 / 2017
2016 / 2017
OUTLOOK
OUTLOOK
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
JEDDAH HOTEL MARKET SUMMARY
HOT TOPIC
PERFORMANCE YT May occupancy rates have decreased by around 5% to 69% when compared to the same period last year.
SUPPLY The second quarter of 2016 saw the opening of the Sofitel Corniche (191 keys), formerly the Westin Hotel, and the Ramada Corniche (165 keys) in the midscale segment.
ADRs have suffered less and maintained their levels slightly above USD 240 over the first five months of the year, reinforcing Jeddah’s position as the most expensive market in the Region.
These completions bring the total supply to approximately 9,000 keys, with around 1,500 hotel rooms. Scheduled to complete later in the year
Increased competition: A significant amount of new supply has opened over the past 18 months, attracted by the strong performance of the Jeddah market. Most of these new entrants are concentrated in the 5 star category; increasing competition in the upscale segment where product differentiation will become an increasingly crucial success factor. The serviced apartment sector has experienced significant growth in Jeddah with Ascott opening three properties within a few months. This brings higher quality supply to a market that previously comprised mostly unbranded and locally managed properties.
HOTEL SUPPLY
CURRENT SUPPLY (2013–Q2 2016)
FUTURE SUPPLY (H2 2016–2018)
1,100 KEYS
1,300 KEYS
1,500 KEYS
7,300
8,500
8,600
9,000
9,000
10,500
11,800
2013
2014
2015
Q2 2016
H2 2016
2017
2018
KEYS
KEYS
KEYS
KEYS
KEYS
KEYS
KEYS
HOTEL PERFORMANCE
OCCUPANCY RATE
74%
AVERAGE DAILY RATE
69% 242
241
USD
USD
-1% YT MAY 2015
YT MAY 2016
YT MAY 2015
Y-O-Y
2016 / 2017
2016 / 2017
OUTLOOK
OUTLOOK / ANNUAL CHANGE
COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
YT MAY 2016
DEFINITIONS AND METHODOLOGY
12 o’clock indicatesa turning point towards a market consolidation / slowdown. At this position, the market has no further rental growth potential left in the current cycle, with the next move likely to be downwards.
3 o’ clock indicates the market has reached its point of fastest decline. While rents may continue to decline for some time, the rate of decrease is expected to slow as the market moves towards a period of rental stabilisation.
6 o’clock indicates a turning point towards rental growth. At this position, we believe the market has reached its lowest point and the next movement in rents is likely to be upwards.
9 o’clock indicates the market has reached the rental growth peak, while rents may continue to increase over coming quarters the market is heading towards a period of rental stabilisation.
OFFICE
RESIDENTIAL
Supply data is b ased on our qu arterly survey of the Grade A & B office space located in the Jeddah CBD, defined as Prince Sultan, Tahlia, Al-Malek, Ibrahim Al Juffali, Amanah Street, Madinah, King Abdullah & Prince Saud AlFaisal (Rawdah) Streets.
The supply data is based o n the Nationa l Housin g Census (20 10) and our qu arterly survey of major projects and stand alo ne developments in selected areas.
Completed bu ildi ng refers to a buildin g that is handed over for immediate occupation. Prime Office Rent represents the top ope n-market rent that could be expected for a notional office unit of the highest quality and specification in the best location in a market, as at the survey date (normally at the end of e ach quarter). The Prime Rent reflects an occupationa l lease that is standard for the local market. It is a face rent that does not reflect the financial impact of tenant incentives, and excludes service charges and local taxes.
Completed bu ildi ng refers to a buildin g that is handed over for immediate occupation. Residentia l performance data is based on two separate baskets one for rentals in villas and ap artments and another basket for sales performance for both villas and apartments. The two baskets cover projects in selected locations across Jeddah.
Office vacancy rates are based on JLL estimates for a basket of buildings that comprises approx. 60% of the current supply.
RETAIL
HOTEL
Classification of Retail Centres is based upon the ULI definition and based on their GLA: • Super Regional Malls have a GLA of above 90,000 sq m • Regional Malls have a GLA of 30,000 - 90,000 sq m • Community Malls have a GLA of 10,000 - 30,000 sq m • Neighbourhood Malls have a GLA of 3,000 - 10,000 sq m • Convenience Malls have a GLA of less than 3,000 sq m
JLL tracks the supply of 3, 4 and 5 star quality hotels. The supply data excludes serviced apartments. Performance data is based on a monthly survey cond ucted by STR Global.
Average Rent Shoppi ng Centre represe nts the quoted average rents for line shops for the major shoppin g malls in Jedd ah. Retail supply relates to the Gross Lettable Area (GLA) within reta il malls. Vacancy rate is base d on estimates from the JLL Retail team, in addition to data rece ived from the Shoppi ng Centre Committee of the Jeddah C hamber of Commerce a nd Industry, and repr esents the average rate across standard in line un it shops at regiona l malls. COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
Jeddah Jameel Square Level 2, Suite 209 Tahliya and Andalus Streets PO Box 2091 Jeddah 8909 – 23326 Saudi Arabia Tel: +966 12 660 2555 Fax: +966 12 669 4030
For questions and inquires about the Jeddah real estate market, please contact: Jamil Ghaznawi Country Head KSA [email protected]
Dana Williamson Head of Agency MENA [email protected]
Andrew Williamson Head of Retail MENA [email protected]
Craig Plumb Head of Research MENA [email protected]
Fayyaz Ahmad Director, Advisory KSA [email protected]
Ahmed Almihdar Senior Analyst KSA [email protected]
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Mohammad Alajmi Analyst KSA [email protected]
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Jll-mena.com © 2016 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in t his document is proprietary to Jones Lang LaSalle and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of Jones Lang LaSalle and shall be kept confidential. Reproduction of any part of this document is authorised only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorisation of Jones Lang LaSalle. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof.
