Jeddah City profile

Amongst other things, Jeddah needs one million housing units in the next 20 years.

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Another look at the developing port – and the opportunities in this coastal ‘boom town’.

Jeddah is known as the ‘gateway city’ in Saudi Arabia. However, the gate has been stuck half open for a number of years as poor roads, an ancient port and near slum-standard housing have created an area crying out for bulldozers to be brought in to bring ‘urban renewal.’

Fortunately, the area is now getting the needed investment - creating opportunities for us all in the machinery industry.

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With an expected population growth of 2.25 million by 2029, there is a high demand for residential properties, and while its all well and good producing luxurious state of the art towers, the real problem lies in the old parts of the city where, according to a report put forward by Jones Lang La Salle in June 2009, there are around 900,000 people living in ‘unplanned settlements’ – otherwise known as slums.

“Jeddah scored relatively poorly in our recent Mena Investor Sentiment Survey, with investors ranking the city below others in the region on a range of criteria including infrastructure, sustainability and real estate market transparency,” the report says.

Over the years there has been a preference for low-density buildings and high land-take development, which affects affordability as it drives up demand for, and therefore the price of, land.

This has lead to a severe under supply of low-cost housing.

Mortgage
A lack of a mortgage law in the city is also leading to the younger generation living with parents or forced into ownership with a huge financial burden.

“The residential sector has been negatively impacted by reduced consumer confidence and limited credit availability that has particularly impacted the sales of waterfront property,” Jones Lang La Salle research manager Fayyaz Ahmad says.

Jeddah Development and Urban Regeneration Company (JDURC), an executive arm of the Jeddah Municipality, is at the heart of initiatives to improve this situation and in May this year it put forward the Jeddah Strategic Plan, mapping out the city’s development over the next 20 years.

“The demand is really high in the city. People are taking advantage of the drop in building material prices and are constructing more,” strategic management of land and property for the Jeddah Development and Urban Regeneration Company vice president Dr Abdullgader Amir told us.

But he also explains: “The supply [of housing] is not yet close to meeting the demand.” As a result, there is plenty of scope for contactors who can bring the right kind of efficient machinery to the jobsites.

Compare this trend to almost anywhere else at the moment, and you will see why this run-down old city has become the new boom town for so many in our industry.