A new mega project planned to accommodate more pilgrims in the Saudi holy city of Makkah is expected to contribute more than $2 billion to the national economy, according to real estate consultants JLL.
Rou’a Al Haram Al Makki, announced late last year by the Public Investment Fund, will play a significant role in boosting Makkah’s economic growth and enhancing the overall sentiment in the Makkah real estate market, said JLL’s H1 2018 Makkah marketplace report.
It said the new project in Makkah is expected to contribute SR8 billion ($2.1 billion) to the national economy, adding that construction is expected to commence later this year, paving the way to increase the city’s ability to host 30 million pilgrims annually in line with the government policy of lifting the quota on Hajj pilgrims.
“With the latest mega project being announced late last year, the Makkah market is likely to witness increased investment across all real estate sectors over the rest of 2018 and beyond,” said Craig Plumb, head of research, MENA at JLL.
“The government is rapidly introducing policies and promoting additional investment across the entire kingdom, to diversify the economy and increase the rate of economic growth. Makkah remains central to attracting Hajj and Umrah visitors and will benefit from the mega project that will also encourage other key stakeholders to invest across all real estate sectors. This new investment will be a particular boost in sentiment towards the hospitality and retail sectors,” he added.
The first Makkah Economic Forum held in May unveiled eight investment opportunities in the Hajj and Umrah sector in the office market, with a value of approximately SR600 million across the two holy cities of Madinah and Makkah.JLL said that while residential rents and sales prices softened further in the first half of 2018, Makkah should experience an increase in prices further down the line as new projects enter the market.
The JLL report also noted that F&B is becoming an increasingly important sector of the retail market in Makkah, as a number of recently completed plazas offering quality international restaurants and food outlets have been opened across the city.It added that the hotel sector is due to witness a surge in supply as 70,000 hotel rooms are planned as part of the Rou’a Al Haram Al Makki development.With other projects already under construction or announced, the supply of quality hotel rooms could increase considerably by 2030.
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