Jeddah hotel rates rise amid higher tourist inflow: CBRE

Jeddah’s hospitality sector continued to experience growth in 2018 with revenue per available room (RevPAR) and average daily rate (ADR) rising eight percent and 10 percent, respectively, year-on-year, consultancy firm CBRE said in a recent report.

In its "2018 Jeddah market snapshot", the consultancy said that 6,400 new keys were expected to be delivered by 2022, in addition to an existing supply of 13,760 rooms.

Given the city’s strategic location on the Red Sea and its role as the gateway to Makkah, CBRE expects ample opportunity for Jeddah’s hospitality sector, owing to the growing number of pilgrims and the anticipated flow of tourists as key entertainment projects are delivered.

Furthermore, the introduction of the new tourist visa will boost the city's hospitality sector, it added.

According to CBRE, more construction activity will take place in the northern areas of the city towards Obhour, as Jeddah continues to expand beyond its role as a historical trading port.

“Large-scale infrastructure including projects such as the Jeddah Opera, the Obhur Bridge and the tram on the Corniche, will further add to the city’s growing reputation as an important cultural, leisure and business hub in the Kingdom," said Simon Townsend, Head of Strategic Advisory at CBRE MENAT and General Manager, CBRE KSA.

While the total residential supply currently stands at 980,000 units, the collaboration between both the public and private sector in the development of affordable housing will be vital in attaining the Saudi government's housing targets, added Townsend.

The government aims to increase home ownership among its citizens by 60 percent in 2020 and by 70 percent in 2030 through its "Sakani" program.

Meanwhile, the office sector is being dominated by flexible leasing, as landlords offer facilities such as F&B and on-site retail to attract corporate clients.

Currently, the city has an office stock of 1.13 million square meters gross leasable area (GLA) which is expected to expand by 400,000 square meters GLA by 2022. Rents have witnessed a decline of up to 10 percent year on year.

On the retail front, Jeddah's existing 1.5 million square meters of GLA will see an addition of 560,000 square meters of GLA by 2022, as the Kingdom continues to focus on the entertainment sector, CBRE noted.