Jeddah Warehouse & Logistics Market Driven by Strong Fundamentals
Automotive, consumer and manufacturing demand to be met by large scale development of facilities across the city
Jeddah, 20 October 2015 – With the Government of Saudi Arabia targeting a contribution of 20% of GDP from the industrial sector by 2020, up from 10% in 2013, Jeddah’s warehouse, logistics and manufacturing market is set to play a key role in meeting this objective. Colliers International’s Jeddah Warehouse & Logistics Market Overview provides a timely update on the state of the market and provides insights on the key trends likely to impact future development.
The report reveals that approximately 45 million sqm of land has been allocated by Modon, a quasi-government organisation that promotes investment and job creation in industrial manufacturing sector through the development of industrial cities. Of this, 25 million sqm has already been developed in Jeddah, with the remaining 20 million sqm still in the construction pipeline.
Jeddah’s warehouse and logistics market has also continued to witness significant development as strong demand fundamentals from the automotive, consumer and construction sectors are being actively addressed by the planned expansion of the city’s logistics capabilities, primarily under the patronage of Jeddah’s Municipality and Jeddah Chamber of Commerce. An important development taking place at the current time is the expected demolition and relocation of the An Nuzha industrial district to a master planned area comprising workshops and light industries in Asfan, with construction expected to be complete in 2016.
The central and southern areas of the Al-Khomra submarket witnessed the completion of a handful of development projects mostly dominated by large warehouses exceeding 10,000 sqm in size.
Commenting on the state of the market and the report, Imad Damrah, Managing Director of Colliers International in Saudi Arabia, said: “We are seeing strong and stable performance in the Jeddah Industrial market at present. Al-Khomra remains the key submarket, accounting for approximately 75% of warehouses. Occupancy levels remain high, and overall lease rates have edged up slightly across the major Al-Khomra areas, while lease rates in the central Al-Khomra area increased by 3% YoY to reach an average of SAR 160 per sqm in Q3 2015 .”
Damrah continued: “The industrial and logistics supply structure in Jeddah is on the verge of change with the construction of the 4th industrial city to the North and the expansion south with more facilities to become available in the 2nd and 3rd industrial cities. As the market grows and develops, we expect facilities that are well located, offering mixed-use premises to benefit and expect to see a greater level of built-to-suit facilities for specific tenants brought to the market by professional developers.”