ALKHOBAR, 13 April 2005 — It is a secret compound managers are not eager to tell. Nevertheless in a city with hundreds of compounds, some signs are evident. Bright new banners proclaiming, “Now Renting” or “Space Available” are outside compounds which never before needed to advertise at all. A large number of compounds in Alkhobar are only partially occupied and are engaged in price wars in an attempt to boost occupancy.
The hardest hit have been the medium-priced compounds which charged from SR55,000 to SR80,000. Most of them had 30 percent to 50 percent occupancy by Western expatriates. After the terrorist attack in May last year, many compound occupants left and those which had been full, suddenly found themselves with many empty units.
When contacted by Arab News, several compounds said that rents had dropped. “Yes, we have reduced our charges by SR10,000,” one compound manager admitted. “A large number of our American and British tenants left last year after the terrorist attack. We kept the villas vacant in the hopes of renting them out at the same price but that did not happen. Ultimately, we were forced to reduce our rents. It is better to reduce and have full occupancy than to charge more and have fewer tenants.”
Another compound manager said, “We were renting units several years ago for SR60,000. There was such a demand that we raised the rent to SR65,000. I never dreamed that it would come down to SR55,000 this year. There are many tenants paying the old rent who are now demanding a reduction. Unfortunately, we will have to comply because there are many new compounds now with bigger and better facilities.”
One manager admitted that the price war was hurting his compound. “We had a waiting list at our compound because we were reasonably priced at SR45,000. Now, however, some of the better compounds have brought their prices down to our level so suddenly, I am stuck with a dozen empty villas.”
Only the high-end compounds have remained unaffected. These are the ones with 90 to 95 percent Western occupants. Their price ranges from SR100,000 to SR150,000. “Our compounds are almost filled to capacity,” a compound manager said rather happily. “We have the best facility and security in town, so many Westerners who had left other compounds are coming to us.”
Those happiest with the price war are compound hunters. One told Arab News, “I’m moving next month to a new compound. I looked at it four years ago but could not afford it. Now, I am moving in for the same rent that I am paying now for a not-so-good compound.”
