Makkah hotels driving record $16bn property sales
Property sales in the holy city soared 350 percent last year
Property sales in the holy city of Makkah, in Saudi Arabia, soared 350 percent last year, to a total value of SR59.4bn ($16.2bn), according to the local real estate committee.
A record 17,920 real estate deals were finalised in the city in 2013, four times the rate in 2012.
Real estate analysts expect the market to increase even further in 2014 to an estimated SR80bn worth of sales, Arab News reported.
Jones Lang LaSalle’s head of hotels and hospitality in the Middle East, Chiheb Ben-Mahmoud, said the kingdom’s massive $21bn redevelopment of the Grand Mosque – Islam’s holiest mosque – and surrounding areas had sparked a resurgence in the area’s real estate.
The Grand Mosque is being renovated and expanded to accommodate 1.5m pilgrims at one time in the site’s largest redevelopment in history.
The government also is redeveloping the city’s slums, including expropriating thousands of properties, which involves paying more than SR100bn in compensation. Much of that compensation is being reinvested into the city’s market.
International hoteliers also are planning huge developments in the city, which attracts millions of pilgrims each year.
One of the largest new hotel developments – a seven-tower hotel complex in Makkah worth an estimated $1.1bn – was announced by the Indonesian government controlled construction company Wijaya Karya (Wika) in July, 2013.
A consortium of Saudi and Emirati developers also are building the first integrated staff housing complex to accommodate 25,000 workers in the city’s robust hospitality sector.
“[The redevelopment] has led to a lot of expropriations because the old areas have very sub-standard housing and unplanned urban development so all these areas have been marked for demolition,” Ben-Mahmoud told Arabian Business.
“Many hotels and accommodation have been demolished, others have been built.
“So with all this reshuffle of the Makkah real estate map, lands that didn’t have a lot of value suddenly had a lot of value.”
Ben-Mahmoud said Makkah was “a very special market” and there was little available information about the value of individual properties.
Makkah Chamber of Commerce and Industry real estate committee head Mansour Abu Al Reesh said the market would likely continue to boom this year due to major projects also in public transport, the city’s road network and train stations.
"Investment infrastructure in the holy city has become attractive to more and more investors who recently moved to establish large investment portfolios in building large residential projects, such as hotels and residential towers,” he told Arab News.
Developer Yusuf bin Awad Al Ahmadi said investing in Makkah real estate had become particularly attractive.
"This has led to the revival of the real estate market, in addition to the disbursement of compensation related to the expropriated properties for the expansion of the Grand Mosque," he said.