Saudi: 25mn sqm industrial development in Jeddah

Of the 45mn sqm of land allocated to Modon, a quasi-government organisation to promote industrial development, 20mn sqm is in the construction pipeline in Jeddah

Jeddah's industrial market is set to grow by 2020. [Representational image]
Jeddah's industrial market is set to grow by 2020. [Representational image]

Saudi Arabia's government is targeting a contribution of 20% of GDP from the industrial sector by 2020, up from 10% in 2013, and Jeddah’s warehouse, logistics, and manufacturing market is expected to play a key role in this development.

Colliers International’s Jeddah Warehouse & Logistics Market Overview reveals that approximately 45 million sqm of land has been allocated to Modon, a quasi-government organisation that promotes investment and job creation in industrial manufacturing sector through the development of industrial cities.

Of this, 25 million sqm has already been developed in Jeddah, with the remaining 20 million sqm still in the construction pipeline.

Jeddah’s warehouse and logistics market has also continued to witness significant development as strong demand fundamentals from the automotive, consumer, and construction sectors are being actively addressed by the planned expansion of the city’s logistics capabilities, primarily under the patronage of Jeddah’s Municipality and Jeddah Chamber of Commerce.

An important development taking place at the current time is the expected demolition and relocation of the An Nuzha industrial district to a master planned area comprising workshops and light industries in Asfan, with construction expected to be complete in 2016.

The central and southern areas of the Al-Khomra submarket witnessed the completion of a handful of development projects mostly dominated by large warehouses exceeding 10,000 sqm in size.

Commenting on the state of the market and the report, Imad Damrah, managing director of Colliers International in Saudi Arabia, said: “We are seeing strong and stable performance in the Jeddah industrial market at present.

"Al-Khomra remains the key submarket, accounting for approximately 75% of warehouses.

Occupancy levels remain high, and overall lease rates have edged up slightly across the major Al-Khomra areas, while lease rates in the central Al-Khomra area increased by 3% YoY to reach an average of SAR 160 per sqm in H1 2015.”

Damrah continued: “The industrial and logistics supply structure in Jeddah is on the verge of change with the construction of the 4th industrial city to the North and the expansion south with more facilities to become available in the 2nd and 3rd industrial cities." 

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