Face to face: Jeddah under the spotlight

Fayyaz Ahmad, Research manager, Jones Lang LaSalle KSA.
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What are the most important projects going on in Jeddah at the moment?

Fayyaz Ahmad, Research manager, Jones Lang LaSalle KSA, answers The Saudi Land Bridge project, which will transport passengers between Jeddah, Riyadh, Damman and Jubail, is an important development. In addition, the King Abdulaziz International Airport expansion and the Jeddah Islamic Seaport expansion are two significant projects going on in the city.

Geoff Sanderson, Principal, Green Concepts, answers There are two that we are involved in. One is the new Jeddah Airport and the other is the Metropolitan Park. All of the infrastructure projects, which are being built in Jeddah, are also important. There is a new rail system that will take passengers to Makkah, for example.

How significantly has Jeddah’s construction industry been affected by the downturn?

Fayyaz Ahmad answers Most sectors have seen increased levels of new supply enter the market at a time of subdued demand resulting from the slowdown, the adjustment in oil prices from their cyclical peak, and tight credit conditions.

Geoff Sanderson answers I don’t think it has been affected because the infrastructure works that Saudi Arabia is spending money on, was budgeted some time ago and those projects have been in the pipeline for quite a while.

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Is there still a demand for new projects in the city?

Fayyaz Ahmad answers Affordable housing is required in the market. Similarly, there is demand for quality hotels, while new standalone projects in the retail sector will do well if they are developed in the city.

Geoff Sanderson answers The development of new projects in Jeddah has slowed down a lot. But, there are still a lot of aspects to Jeddah’s infrastructure, which need to be replaced and this is what is being done.

Is there enough supply of infrastructure and housing to accommodate Hajj pilgrims?

Fayyaz Ahmad answers Yes, there is enough supply of housing, but a lot of the stock is old and needs to be redeveloped. Hajj pilgrims use only the airport and hotel and they spend most of their time in Makkah and Madinah. So, the supply of housing in Jeddah does not affect them.

Geoff Sanderson answers The number of people travelling into Jeddah, for Hajj, this year has been less than in previous years because of the spread of swine flu. But, there is clearly not enough supply of infrastructure and that is why Jeddah is looking to expand these developments.

Why do people choose to set up their businesses in Jeddah?

Fayyaz Ahmad answers Jeddah still has a lot of interest for retail trade and warehousing. The hotel market will also get more attention because Jeddah receives the highest number of domestic and foreign tourists. However, Jeddah is still a secondary market because multinational firms like to be based in Riyadh.

Geoff Sanderson answers In my opinion it is overrated. It is a very costly and time-consuming process to get into the market and you can’t expect to be earning reasonable profits within the first 12 months unless you are well financed and can provide companies, in Jeddah, with resources that they don’t already have.

What is the current focus of the Jeddah construction market?

Fayyaz Ahmad answers There is a focus on the development of basic infrastructure and raising the attraction of the Red Sea coast. Companies are now investing in resorts and hotels. At the same time, redevelopment of old down-town Jeddah is a priority for the government.

Geoff Sanderson answers I don’t think there are many new residential projects being developed there at the moment. But, Saudi Arabia is likely to pace its growth according to the actual needs of its people.