01 December 2016

Jeddah will have achieved in two years time some of its key ambitions. The world’s tallest tower, a high-speed rail, and a magnificent new airport – are all set to come to fruition by 2019.

Jeddah will have a lot to boast about by 2019 – a date by which some of its most ambitious projects will see completion.

These include the world’s tallest tower – the kilometre-high Jeddah Tower, the Haramain High-Speed Railway, and the showpiece new terminal at Jeddah International Airport, among others.

The expansion of King Abdul Aziz International Airport (KAIA) is poised to open next year, following which the General Authority for Civil Aviation is expected to unveil the next phase of development which will further boost the airport’s capacity and eventually look to create an airport city with significant investment from the private sector.

The airport expansion is one of the largest construction projects in the country. The first $7.2-billion phase will expand the airport’s capacity from 17 million to 30 million passengers annually (see Page 68).

This expansion is one of two strategic transportation schemes – the other being the Ha-ramain High-Speed Railway project – which will open up huge opportunities for growth and prove a magnet for private sector investment, which Saudi Arabia is encouraging against a backdrop of falling oil revenues.

Ahead of the opening of the new KAIA terminal, property experts have been reporting increased demand for office space in the vicinity: Jones Lang LaSalle (JLL), a global real estate advisory firm, has indicated that office spaces located north of Madinah Road and Sultan Street have already increased lease rates ahead of the completion of the work. 

Meanwhile, work on the Haramain High-Speed Rail (HHSR) link – a 450-km passenger train line linking Makkah and Madinah via Jeddah and King Abdullah Economic City (KAEC) – will now proceed apace with a revised opening date of March 2018, following an agreement between the Saudi Railways Organisation (SRO) with the Al Shoula consortium building it to resolve disputes over delays and cost overruns affecting it. The line had originally been expected to open in January 2017.

The HHSR link has primarily been designed to cater to Muslim pilgrims. However, it is expected to bring significant economic benefits to the city as well. For instance, the reduced commuting time from Jeddah to KAEC could open up the housing available at KAEC to Jeddah, thus addressing some of the shortage faced by the city. 

Among other major transportation projects for the coastal city is the proposed $12-billion metro, which is slated to start operations by 2022. The project is currently in the early design stages. The three metro lines will cover 152 km and serve 92 stations.

Another major transport scheme, the Saudi Landbridge – the rail link from Jeddah to Riyadh, which will open the overland route to Dammam on the kingdom’s east coast – is expected to open in 2020. 

Meanwhile, the Jeddah Islamic Port (JIP) is also under expansion, where its first bonded and re-export zone (BRZ) is being set up.

 

Real Estate

Jeddah witnessed an overall slowdown across all its real estate sectors in the first half of the year due to the demand-supply mismatch and the country’s overall macroeconomic scenario. Although further efforts have been made towards addressing the shortage of affordable housing, a number of major projects (including those by Eskan and Salman Bay Housing) continue to experience delays, according to JLL.

The diversification of the economy outlined in the 2030 Vision for KSA should have a positive impact on the Jeddah real estate over the longer term, it says.

The most ambitious real estate project in the kingdom is the Jeddah Tower, which is set to be the world’s tallest building. Being developed by the Jeddah Economic Company (JEC), the superskyscraper – previously known as Kingdom Tower – has now reached its 48th level, or 198 m and is steadily ascending to its lofty height of 1,000-plus m.

The project – which has suffered delays due to funding issues that were resolved following a deal with Riyadh-based bank Alinma – is now due for completion at the end of 2019. The contractor on the project is Saudi Binladin Group, which is also a shareholder in JEC.

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