Saudi Arabia’s Jabal Omar Development Company returns to profit

The biggest clock in the world with a 45 meters diameter, overlooks the Grand Mosque. (AFP)
Updated 23 October 2018
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Saudi Arabia’s Jabal Omar Development Company returns to profit

  • Developer launches roadshow to promote 'Address' brand
  • Taps into rising occupancy rates in holy city

LONDON: The Saudi developer behind the transformation of the center of Makkah — Jabal Omar Development Company — has returned to profit in the third quarter after a string of losses over the last year.
The change in fortune will be welcomed by the Tadawul-listed company as it pushes forward with its luxury hotel, residential and retail developments being built to meet the anticipated growth in demand from visitors and pilgrims to the holy city.
Net profit — minus Zakat and tax — reached SR469.62 million ($125.13 million) for the three months ending Sept. 30 in a Saudi exchange filing on Tuesday. This compared to a loss of SR593.97 million recorded in the same quarter last year.
Jabal Omar said the improved profits were due to increased revenue from sales of residential units.
Third-quarter revenue reached SR1.32 billion compared to revenue of SR45.52 million in the same time period the previous year.
The developer also cited a “positive performance” within its commercial sector as well as a reduction in some of the company’s financial burdens.
The results come in the same month Jabal Omar launched a three-day roadshow on Oct. 8 to market its new “Address“-branded Makkah luxury hotel development.
It is a project being managed by Dubai-based Emaar Hospitality Group — the company behind the high-end “Address” hotel brand. Jabal Omar said is looking to sell 741 freehold units.
The project marks the first time Emaar’s ‘Address Hotels and Resorts’ brand has expanded into Saudi Arabia. It is scheduled to open in 2019 and it will be just a few steps away from the Grand Mosque.
Market commentators say they expect demand for luxury hotels and other residential projects in Makkah to continue to be “strong” in the coming year — something Jabal Omar Development Co. will be keen to capitalize on.
“Makkah is a unique market and there is strong demand for luxury hotels throughout the year. A large proportion of demand for luxury hotels come from wealthy GCC travelers, who are largely repeat visitors to the Holy City,” said Rashid Aboobacker, director at the Dubai-based tourism consultancy, TRI Consulting.
“There has always been high demand for luxury residences in Makkah close to the Haram, driven by the prestige and special status of the location as well as the limited supply,” he said.
“Once the ongoing expansion works are complete, the visitor numbers are set to increase substantially. Consequently, we do not foresee any risk of overcapacity in Makkah in the foreseeable future,” he added.
He added that alongside the growth in luxury developments, there is also a “growing need” for midscale and economy hotels and apartments.
“We believe that there is also need for upgrade of the existing stock as a large proportion of them do not fully conform to international quality standards and guest requirements,” he said.
Christopher Lund, head of hotels, Mena, at the consultancy Colliers International, noted that the luxury sector tends to perform better than other parts of the Makkah hospitality market.
“The 5-star upper-upscale and luxury hotels in Makkah have outperformed the overall market, achieving a 12 percent higher occupancy level year-to-date September 2018, which is primarily due to the fact that the 5-star hotels are located in the most prime locations in the central area,” he said.
“So far in 2018, hotels in the central area have achieved a 49 percent higher RevPar (revenue per available room than the overall Makkah quality hotel market.”


Hong Kong economy cools as trade tension mounts

Updated 16 November 2018
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Hong Kong economy cools as trade tension mounts

HONG KONG: Hong Kong’s economic growth slowed in the latest quarter and the government warned it could face headwinds from US-Chinese trade tension and higher interest rates.
Government data Friday showed the Chinese territory’s economy expanded by 2.9 percent over a year earlier, down from the previous quarter’s 3.5 percent.
Exports rose 5 percent over a year earlier, but the government said the impact of trade tension and weaker global demand “has begun to surface” and is “likely to become more apparent in the near-term.”
The government said Hong Kong also faces a drag from higher interest rates. The Hong Kong dollar has a fixed exchange rate with the US dollar, which requires the central bank to raise interest rates along with the US Federal Reserve even though economic growth is slowing.