Posted inOpinion

Why should you invest in Jeddah’s real estate market?

Fueled by economic diversification, urban development, and a growing population, Jeddah offers lucrative investment opportunities across residential, commercial, and hospitality sectors

Why should you invest in Jeddah’s real estate market?

As the global real estate landscape remains in flux, the historical city of Jeddah stands out as a beacon of opportunity in the Middle East. The seaside settlement steeped in history is experiencing a renaissance in its real estate market. Market trends suggest that the average residential apartment sales prices in the city have increased by 6% to $1,147 per square metre (SAR 4,250) while average villa prices increased by 4% to $1,390 per square metre (SAR 5,150) in the last quarter of 2023. 

Commercial real estate is booking as well–the supply of office spaces in Jeddah stood at 2.1 million sq meters by the end of 2023, recording a year-on-year (Y-o-Y) increase of 2%. The Jeddah real estate market continues to show signs of growth across most sectors, with notable improvements in office rents and hospitality performance, driven by rapid economic diversification, urban development initiatives, and a growing but diverse population.

Jeddah: Showing no signs of slowing down

Saudi Arabia’s Vision 2030 initiative has propelled the diversification of the economy, reducing its reliance on oil revenue and fostering a more sustainable economic ecosystem. As the commercial capital of the Kingdom, Jeddah is at the forefront of this transformation. Jeddah’s real estate market is characterised by diverse investment opportunities across residential, commercial, and hospitality sectors.

With a strategic location on the Red Sea coast and a thriving business environment, the city is witnessing unprecedented growth across various sectors, including tourism, logistics, and manufacturing. This has provided a shot in the arm for not only the office rentals but for the hospitality sector as well–along with Riyadh, Jeddah led the regional market in terms of average daily rate (ADR) performance as Saudi Arabia’s tourism industry experienced a rebound. Hospitality remains a key marker, driven by the influx of tourists and business travellers that drive the demand for luxury hotels such as the Ritz-Carlton Jeddah and Park Hyatt Jeddah Marina, Club and Spa, among others.

As the country goes on a modernisation spree to grab the future, urban development projects are reshaping Jeddah’s skyline, creating a metropolis that caters to the needs of its residents and businesses. The Jeddah Economic City, home to the iconic Jeddah Tower, slated to be the tallest building upon completion, is a prime example of visionary urban planning. This mixed-use development aims to redefine urban living with luxury residences, commercial spaces, and world-class amenities but is also a statement that symbolises the city’s ambition and potential.

In the commercial sector, office complexes like the Jeddah Financial District are attracting multinational corporations seeking a strategic foothold in the region. With world-class infrastructure and connectivity, these developments serve as catalysts for economic growth and job creation.

As a result, modern residential developments well-suited to the demands of homebuyers become a necessity. Residential developments such as Al Alandalus and Rawabi Jeddah offer modern living spaces equipped with state-of-the-art facilities and amenities. These projects cater to the growing demand for quality housing among the city’s affluent population.

Hitting the right notes

During the third quarter of 2023, the residential market in the Saudi capital and Jeddah experienced significant growth, with a combined addition of approximately 12,400 new residential units that brought the total stock of residential units to 875,000 in Jeddah. 

Sustainable development is a key pillar of real estate developments in Jeddah and is shaping its future. Green buildings with energy-efficient features and eco-friendly materials are attracting tenants willing to pay a premium. Investing in such properties ensures long-term value appreciation and aligns with Saudi Arabia’s green initiatives.

The Jeddah Central Project is a key example of this futuristic outlook–developed on a massive 5.7 million square metres in the heart of the city, the $ 19.9 billion+ project reflects the contemporary interpretation of Hijazi essence and has adopted world-class sustainability standards.  The oceanarium and the coral farms, a part of the project, are not only infotainment but also showcase the country’s commitment to preserving the unique flora and fauna of the Red Sea.

Jeddah is not just a market; it’s a gateway to prosperity and success in the heart of the Middle East. As Saudi Arabia continues its journey towards economic diversification and modernization, Jeddah will play a pivotal role in shaping the future of the Kingdom, positioning its real estate market as poised for continued growth and innovation. The unique blend of tradition and modernity, as well as the opportunity for growth, characterises Jeddah’s real estate market.

The city’s strategic location, robust infrastructure, and pro-business environment make it an attractive destination for local and international investors alike. By capitalising on emerging trends, investing in transformative projects, and aligning with the vision of Saudi Arabia’s leadership, the market is ripe for offering lucrative returns and contributing to the sustainable development of the city and the country.