JEDDAH, 28 January 2008 — The recent announcement to expand the north and northwestern courtyards of the Grand Mosque in Makkah is dramatically increasing real estate prices in the central area of the holy city with businessmen and analysts expecting prices to exceed SR1 million per square meter.
Custodian of the Two Holy Mosques King Abdullah approved the new expansion project earlier this month. The approval includes the acquisition of land and other properties, covering an area of 300,000 square meters. Special committees have begun estimating the value of real estate in the area and as many as 1,000 properties in the Shamiya and Shubaika areas will be demolished as part of the expansion project. The government has also allocated some SR6 billion to be paid in compensation for properties. Sources said the demolition of old buildings in the area would begin on March 9.
The project will change the face of Makkah with many families, who have been living in the area for several years, forced to find accommodation in other places. Shamiya and Shubaika, next to the massive prayer complex, are situated in one of the most expensive pieces of real estate in the world.
Analysts said land prices in the area would go up astronomically after the acquisition. Al-Sharief Mansour Abu Rayash, chairman of the Real Estate Committee at the Makkah Chamber of Commerce and Industry, said the announcement about the expansion had already increased prices to SR250,000 per square meter in some areas. He expects prices would shoot up to SR1 million as a result of growing projects.
Abu Rayash, who is on the committee for the evaluation of real estate for acquisition, said the panel would consider the distance of the property from the mosque. “The closer the property, the higher its price,” he said.
Hani Al-Amri, a real estate analyst, said owners of hotels, furnished villas and other properties in Shamiya, Marwah, Raquba and Jabal Al-Kaaba areas would demand high prices in compensation because of their proximity to the Grand Mosque. “This would in turn lead to increasing prices of real estate in the area,” he added. Average annual house rent in Makkah’s northern and eastern districts has reached SR20,000 to SR25,000 and in southeastern neighborhoods SR35,000.
Mohammed Shaker Al-Dahlawi, director of compensation at the Ministry of Transport, said those who purchase land in the area would be able to make a huge profit by constructing multi-story buildings. Al-Dahlawi, however, pointed out that low-income people, including pilgrims, would find it difficult to get accommodation close to the Haram after the demolition of buildings in Shamiya and Shubaika.
According to reports, the Shamiya neighborhood is more than 500 years old. Many well-known families have lived in areas close to the holy mosque for years. They include Hashim, Tayeb, Kurdi, Jifry, Yamani, Dahlan, Dahlawi, Zahid, Mufti, Fatani, Ghazawi, Turki, Gazzaz, Hariri, Kattan, Basarawi, Iraqi, Abu Mansour, Ojaimi, Rushaidi, Qusti, Shatta and Abu Al-Naja.
