Location of Hajar Tower
within Abraj Al-Bait
About
ECONOMIC SITUATION IN MAKKAH

Makkah is considered one of the most active investment cities in Saudi Arabia and the entire world. Many real estate developers confirm that Makkah has been one of the best cities in real estate circulation  throughout the year.

It is noticed that Muslims, in general, are developing great interest in the purchase of real estates in Makkah, especially after the Saudi government allowed foreigners, for the first time ever, to own real estates in the country throughout a renewable 25-year period. Some reports mentioned that investments in Makkah have reached an unprecedented level amounting to SR 750 billion, due to the city’s private privilege being the host of the Holy Mosque. Consequently, investments in the hotel sector have increased in the pilgrims’ housings in the Holy Capital of more than SR 400 billion.  In 2008, the occupancy percentage and lease rates in Makkah hotels went up remarkably, by 60% more than last year especially during the seasons. According to real estate experts in the city of Makkah, hotel leased premises, which serve the pilgrims, mounted up to SR 1 billion ($266 million approximately) during Ramadan and Hajj season only. The experts expect the real estate returns to increase during further season due to the decrease of available properties in the Holy Capital resulting from the new development projects, especially in the central area of Makkah  and Madinah.

Before Demolishing (23/10/2006)

With the continuous increase of pilgrims' figures, existing projects do not cover more than 14% of their demand. The market gap in Makkah is currently estimated of about 5500 housing rooms, expected to expand during the next few years. Statistics reveal that the number of Makkah visitors will reach more than eight million pilgrims throughout the next year 2010, such number is expected to amount to 15 million pilgrims until 2015. The Supreme Development Authority of Makkah established a structure plan for the central area to be the general development guide during the next 25 years. Such plan aims at providing enough services and premises for Makkah residents and pilgrim visitors, reflecting the volume of real estate investments. Thus, elimination operations of the entire area of Al Shamia, opposite the Northern area of the Holy Mosque, started in order to launch expansion works in the Northern and other areas where more than 5000 ownerships, worth SR 19 billion, were expropriated.

In addition, mobilization works of Jabal Omar Project and Khandama Project have been launched. Infrastructure preparations for these projects are expected to take no less than 5 years, whereas the construction works will start thereafter. There is no doubt that such preparations will last for another 5 years until the operation starts.

Therefore, the removal of these properties will lead to a great decrease in available hotel rooms in the central area surrounding the Holy Mosque for no less than 10 years. This will increase the occupancy rates in the excellent hotels remaining near the Mosque, and will positively effect the operational returns of such hotels the number of which is becoming very limited such as “Hilton and Makkah Towers” and “Dar Al Tawhid” (some sources say that they will be removed soon), then the newest hotel that will cover all pilgrims’ future requirements and services, i.e. “Movenpick Hajar” owned by Hajar Tower Real Estate Company.

As evidence, room prices in hotels surrounding Makkeh Holy Mosque have increased remarkably reaching around 150% in the last ten days of Ramadan 2008: the price of a five-star-hotel room overlooking the Mosque was between SR 5000-6000 per night. Occupancy rate increased 100% in the central area hotels, while the returns of such hotels are expected to exceed SR 200 million in the last ten days of Ramadan.

Following is the schedule showing the latest statistics during umrah and Hajj seasons in the last two years and relevant effects on the real estate investment in the Holy Capital:

Statistics of Umrah seasons in 2007-2008 
Year

Number of Pilgrims until the end of Ramadan

Housing Sector Income

Hotels’ returns of Umrah  season

2007

3,100,000

SR 4 billion

Unconfirmed

2008

3,375,000

SR 4.6 billion (+15% increase)
According to annual increase of pilgrims
SR 500 billion during the last ten days of Ramadan.
After Demolishing (26/5/2008)

Statistics of Hajj season in 2007-2008
Year Number of Pilgrims

No. of Nationalities in Hajj

Hajj Companies’ Revenues

Housing Sector Income Yearly Increase % in 2007-2008

2007

1,707,814 (from abroad)
+746,511 (from KSA)
= 2,454,325 (officially) + No. of intern pilgrims without official permit = 600.000 pilgrims approximately  

178

SR 14.5 billion

SR 4 billion

60%

2008

1,729,841 (from abroad)
+679,008 (from KSA)
= 2,408,849 (officially) + No. of intern pilgrims without official permit=1,000,000 pilgrims approximately
Total = 3,500,000 approximately  

181

SR 18 billion (25% increase)

SR 6 billion


Analysis: The yearly increase of the housing sector income during Hajj and Umrah seasons is due to many reasons, including:

  1. Huge number of pilgrims.
  2. Removal of more than 1000 properties in favor of expansion.
  3. Unsuitable buildings close to the Holy Mosque and high rent costs in Makkah Properties.

Through these results, during the next following years, we can predict the extent of the increasing operational returns of hotels, distinguished by their service and scope of view towards the Holy Mosque, especially “Hajar Tower” marked by many hard-to-compete Features.

Any investment in Hajar Tower well be blessed -Allah Willing- because this project is included in the Primordial House Towers “King Abdul Aziz endowment Project", the returns of which are allocated to serve the Two Holy Mosques. Such investment is also safe as well as guaranteed and sponsored by our company –Allah Willing– throughout the 25-year Utilization  period.
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