With the Saudi government’s ongoing commitment to boosting home ownership amongst local residents, demand for Jeddah’s residential sector is expected to gain momentum, highlights JLL’s Q1 Jeddah Real Estate Market Overview report, launched at Cityscape Jeddah today. This comes as the Kingdom aims to increase the real estate sector’s contribution to GDP to 10% by 2020, up from 5%.
Among the targets set in Vision 2030, the government aims to reduce the average waiting period for local residents to obtain housing financing from 15 years to 5 years, and increase household ownership ratio from 47% to 70% by 2030.
“There is an indication that the residential market may be headed towards the bottom of its cycle due to the slowdown in the rate of decline in sales and rental prices on a quarterly basis,” said Dana Salbak, Associate, JLL MENA.
“To stimulate demand in the residential market the Kingdom is making rapid progress by introducing various residential schemes to increase local investors. The government has launched large-scale and world-class projects, implementing urban development and regeneration schemes, and has invested heavily into the infrastructure to improve Jeddah’s overall connectivity,” she added.
In addition to the government efforts in expanding the residential sector, Saudi Arabia is committed to increasing the role of the private sector in the development of its cities through encouraging private, public partnerships (PPP’s).
“PPPs form a key component of Saudi’s National Transformation Program, which aims to increase the percentage of private sector investment from 40% of GDP in 2016 to 65% by 2030. They provide the opportunity for private sector investors and developers to access areas of the Saudi real estate market that were previously only available to the public sector,” she continued.
Private sector funding can play a pivotal role to alleviate the need for public spending and promote a more efficient use of both public and private capital.
“While the PPP model is already in practice as the government announced new housing schemes consisting of 48 projects last year*, we expect to see the announcement of further PPP agreements over the coming years, particularly in the housing, healthcare and education sectors of the real estate market,” she added.
Underlying these public and private sector efforts is the need to improve the overall market transparency, to create an attractive investment environment. Already the lure of economic opportunities resulted in several international real estate firms entering the market, or expanding existing operations, and working more closely with local companies to enforce international standards.
