Jeddah residential property sector may be poised for rebound: report

Affordability issues and inadequate access to financing weighed on the demand for Jeddah residential properties. (AFP)
Updated 10 April 2019
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Jeddah residential property sector may be poised for rebound: report

  • ‘The rate of decline appears to have slowed down over the quarter, indicating the market may be headed towards the bottom of its cycle’
  • Affordability issues and inadequate access to financing weighed on the demand for Jeddah residential properties

DUBAI: The residential property segment in Jeddah could be poised for a rebound after the decline in rents and sale prices softened during the first quarter, a report from research provider JLL Mena showed.
“Residential rents and sale prices declined on an annual basis. However, the rate of decline appears to have slowed down over the quarter, indicating the market may be headed towards the bottom of its cycle,” JLL Mena said.
Affordability issues and inadequate access to financing weighed on the demand for Jeddah residential properties during the period, resulting to a 11 percent annual decline in rents for apartments and 12 percent for villas. Sale prices for apartments and villas, meanwhile, continued to soften by 8 percent and 7 percent, respectively, year-on-year.
The three months to March recorded the delivery of approximately 1,660 standalone units, bringing the aggregate supply of residential units in Jeddah to 819,000.
The first quarter saw many developers delay the delivery of their projects as demand remained subdued, JLL Mena said in the report.
Meanwhile, office rents continued to soften as vacancy rates rose due to a slowdown in commercial activity.
“In the short-to-medium term, we expect rents to continue their downward trajectory as more supply is delivered to the market. In the long-run and as business activity picks up, we can expect to see office rents regain some momentum, particularly for quality grade office buildings,” JLL Mena said.
“In terms of location, office buildings along the primary Commercial Business District areas have been and are likely to remain popular. However, emerging areas with more advanced connectivity and amenities are expected to gain prominence and achieve a premium on office rates.”
Retail rental values were steady despite the growth of e-commerce in the kingdom, while hotel occupancy rates maintained their levels as improvements to Jeddah’s infrastructure continue to ease business and religious travel, JLL Mena said.


‘Huge increase’ in crude prices not expected: IEA executive director

Updated 19 July 2019
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‘Huge increase’ in crude prices not expected: IEA executive director

  • The International Energy Agency is revising its 2019 global oil demand growth forecast down to 1.1 million barrels per day
  • IEA’s Fatih Birol: Serious political tensions could impact market dynamics

NEW DELHI: The International Energy Agency (IEA) doesn’t expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets, its executive director said on Friday.
“Prices are determined by the markets ... If we see the market today, we see that the demand is slowing down considerably,” said IEA’s Fatih Birol, in public comments made during a two-day energy conference in New Delhi.
The IEA is revising its 2019 global oil demand growth forecast down to 1.1 million barrels per day (bpd) and may cut it again if the global economy and especially China shows further weakness, Birol told Reuters in an interview on Thursday.
Last year, the IEA predicted that 2019 oil demand would grow by 1.5 million bpd. But in June this year it cut the growth forecast to 1.2 million bpd.
“Substantial amount of oil is coming from the United States, about 1.8 million barrels per day, plus oil from Iraq, Brazil and Libya,” Birol said.
Under normal circumstances, he said, he doesn’t expect a “huge increase” in crude oil prices. But Birol warned serious political tensions could yet impact market dynamics.
Crude oil prices rose nearly 2 percent on Friday after a US Navy ship destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows.
Referring to India, Birol stressed the country could cut its imports, amid rising oil demand in the country, by increasing domestic local oil and gas production.
Prime Minister Narendra Modi had set a target in 2015 to cut India’s dependence on oil imports to two-thirds of consumption by 2022, and half by 2030. But rising demand and low domestic production have pushed imports to 84 percent of total needs in the last five years, government data shows.
Meanwhile, the IEA doesn’t expect a global push toward environmentally friendly electric vehicles can dent crude demand significantly, Birol said, as the main driver of crude demand globally has been petrochemicals, not cars.
He said the impact of a serious electric vehicle adoption push by the Indian government would not be felt immediately.