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Makkah real estate foresees a SR3 billion loss this Haj

P1040335The Haj housing sector in Makkah is likely to lose SR3 billion this year as a result of a 20 percent government-ordered reduction in the number of foreign pilgrims, said Mansour Abu Rayash, chairman of the real estate committee at the Makkah Chamber of Commerce and Industry (MCCI).

Abu Rayash blamed the deficit on ongoing expansion works, regional unrest and the Ebola virus.

This year’s SR3.5 billion revenue is 45 percent less than last year’s profits, said Abu Rayash.

The sector is expected to fully recover, however, once the Grand Mosque expansion is complete. In fact, around 2 million foreign pilgrims are expected to perform Haj in 2016, increasing demand for hotels and accommodation in the holy city, he told Arab News.

“Another source of loss was the recent ban on pilgrims coming from African countries, such as Sierra Leone, in the wake of the Ebola outbreak and the ongoing political crises plaguing the Arab world,” said Abu Rayash.

He also blamed Haj companies and tourism agencies for causing tremendous losses to building owners and investors.

“The average Haj pilgrim spends SR2,500 on housing. Pilgrims who stay around central Makkah pay anywhere between SR4,000 to SR7,000, while worshippers who are lodged further away will pay between SR1,000 to SR2,500. Many of these rooms surprisingly remain vacant until now.”

Mazen Darrar, a realtor in the Makkah housing sector, expects pilgrims to pay on average SR3,000 for housing during the upcoming season.

The prices of five-star hotels differ depending on the services they offer. Pilgrims who stay at luxury hotels can end up paying more than SR25,000, but they are few, he pointed out.

Darar said several contracts will likely be signed in coming days between realtors and foreign tourism companies since many of these companies have begun booking accommodation for their customers ahead of the busy season.

Tawfik Al-Suwaihry, another investor in the sector, also said that there was a decline in real estate prices this year compared with 2013, especially because of the decrease in the number of foreign pilgrims.

Source: Arab News

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