Saudi Arabia expects 8 million pilgrims by 2010
Increase in religious tourism to drive Kingdom's real estate growth
Pilgrims visiting the holy cities of Makkah and Medina to perform Umrah and Haj are expected to reach 8 million by next year, according to recent Saudi government figures.
The demand from the world’s 1.8 billion Muslims is expected to drive real estate growth not only in the holy cities, but also in the gateway city of Jeddah.
Cityscape Saudi Arabia event director Deep Marwaha at the Jeddah Center for Forums and Events, said it was “easy to understand” why investors were keen to support developments in and around Makkah, Medina and the commercial hub of Jeddah.
“First of all, demand is insatiable, with visas for the Haj season now restricted,” Marwaha said.
“Secondly the return on investment is virtually guaranteed and risk free. Room rates at the Makkah Hilton Towers which overlooks the Haram can reach 30,000 SAR (US $8000) per night during peak periods.”
Marwaha added that much of the land that surrounds the holy sites is being developed and the property market is attracting timeshare and end users, as well as professional investors.
Last year a record 1.73 million foreign pilgrims performed Haj and, in addition to overseas pilgrims, there were approximately 750,000 Saudi pilgrims, according to government figures.
Saudi Arabia’s real estate sector now contributes an estimated 5.1%, or SAR 55 billion ($14.7 billion), to the kingdom’s GDP, with forecasts for further growth of 5.8% by the end of this year.
According to a study carried out by Proleads research house for Cityscape Saudi Arabia, in total throughout the Kingdom, there are 812 active projects in real estate, leisure and entertainment and infrastructure sectors with a total budget of $543 billion.
“However, it’s not just about residential or commercial real estate,” commented Marwaha.
“Last year 1.5 million pilgrims arrived by air, 131,000 by land, and nearly 23,000 by sea. So the demand for infrastructure (roads, airports, port upgrades as well as hospitals and clinics) is also immense and holds tremendous opportunities especially for public-private partnerships.”