JLL: Real Estate in Saudi Arabia's Holy Cities
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The road to home finance has been a long one for the Kingdom, but with its highly anticipated mortgage law edging ever closer to ratification, would-be homeowners and financial institutions are gearing up for a new era of opportunity.
With the announcement this year of a US$66.7 billion initiative to address the demand-supply imbalance in the Kingdom’s housing market, social infrastructure spend is topping the Government agenda as it focuses on building affordable homes for the future.
The South-East Asian island has seen a number of distinctive developments come to fruition over the past few years as the country further establishes itself.
The Muslim Holy Cities of Makkah and Madinah are unique real estate markets, benefitting from effectively unlimited visitor demand from the world’s 1.8 billion Muslims.
Increasing Hajj and Umrah visitation to the Holy Cities (from the current total of around 7.8 million per annum) is dependent upon relieving the existing infrastructure and other capacity constraints. Given the significant movement between sites associated with the Hajj, the prime constraint relates to the ground transport system within and between the Holy Cities and not broader airport capacities or the ability to provide sufficient accommodation.
Our analysis of potential capacity constraints suggests that the total number of Hajj and Umrah pilgrims visiting Makkah and Madinah could almost double to 13.75 million by Hijri year 1440 (2019).
Increasing pilgrim numbers will provide significant opportunities for an expansion of the existing hotel room supply, with a total of around 82,000 hotel rooms being required in Makkah by Hijri year 1440 (2019).
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