Entertainment sector development continues to remain popular in Jeddah in Q2
The development of cinemas, along with cultural and artistic centers, will drive steady growth in Jeddah’s entertainment and cultural sectors, offering developers opportunities to invest into new, diversified sectors, according to JLL’s Q2 2018 Jeddah Real Estate Market report launched today.
Saudi Vision 2030 is heavily focussed on the diversification of the economy, resulting in a rigorous process of reforms being introduced, and paving way for developers and investors to venture into newly established sectors. The expansion of Jeddah’s entertainment sector and cultural offerings bodes well for the hotel sector in the long term, as a series of cultural, leisure and entertainment initiatives are being introduced in Jeddah’s real estate market, including the Jeddah Opera House. These projects are aimed at diversifying Jeddah’s visitor base, which is expected to see a growing mix of corporate, leisure, local and gradually international visitors, creating further demand for hotels in the market.
“The announcement of the Jeddah Opera House and the subsequent development of cinemas and cultural centers will introduce further investment opportunities for international and local companies, looking to move into new sectors,” said Craig Plumb, Head of Research, MENA at JLL.
“The Kingdom is now in its implementation phase of the Saudi Vision 2030, which aims to diversify the economy from oil dependency, by increasingly investing into the tourism and other sectors. Developments in the entertainment, art and cultural sector will improve the sentiment across all categories of the real estate market” he added.
In May, Jeddah hosted the Makkah Region Economic Forum announcing investment opportunities in Makkah. With Jeddah being the gateway city to Makkah, such initiatives will aim to create an attractive business environment and stimulate further investment within the region. The city remains the major business center of the western region and will benefit the most from increased office demand resulting from higher levels of investment. Another boost to the overall business environment in Saudi, which could translate into increased demand for office space is the $10bn Delivery Plan 2020 by the National Center for Privatization. This comprises five initiatives to privatize state assets, four projects to corporatize state entities and the delivery of 14 PPP projects by 2020.
Over 82,000 m2 of gross leasable area (GLA) is expected to enter the market in H2 to add to total quality office GLA in Jeddah currently at 1 million m2.
Following a quiet start to the year, a number of notable residential developments were handed over in Q2 2018, with further completions expected later this year. Plans for the Obhur Bridge by Jeddah Metro will reduce travel distances towards major hubs and business centers, making the northern suburbs a more desirable destination to live. The total supply of residential units in Q2 reached 817,000 with a further 4000 units expected over H2. Average rents declined by 2.5% while villa rents declined by 3.2% QoQ in Q2 2018.
The expansion of the entertainment sector directly impacts the retail sector, with the first permanent cinema to be housed in the Red Sea Mall in Jeddah. Vox Cinemas will be investing in the mall, with operations set to commence in Q1 2019. The retail sector will also benefit from a number of new cinemas resulting from the agreement signed earlier this year between Vue Cinemas and Al Hokair Holding Group. Total supply in the market is stable at 1.4 million m2. Total expected GLA for 2019 is 268,000 m2.