Abdulrahman Al-Misbahi Okaz/Saudi Gazette JEDDAH – Nearly 300 warehouses and 80 factories in Al-Khumra area in south Jeddah are facing possible closure in the wake of an exorbitant rent hike. More than 1,200 Saudi families will be affected if the warehouses and factories are forced to close. Warehouse owners are planning to meet Makkah Emir Prince Khaled Al-Faisal and seek his intervention to solve the crisis. Owners of factories and warehouses have received letters from the Jeddah Chamber of Commerce and Industry (JCCI) informing them about a rent increase from the current SR4 per square meter to SR90 per square meter. The factories and warehouses are operating in an area that was leased to them by the JCCI more than 30 years ago. If the rent increase comes into effect, the warehouses and factories will have to pay SR190 million in annual rent instead of the current SR9 million. Owners of warehouses have said that a steep hike in rent has shattered all their hopes. Representatives of warehouses and factories met with deputy chairman and acting secretary of the JCCI on Tuesday and demanded the rent hike decision be rescinded. JCCI officials, however, explained to them the circumstances that led to the rent hike. JCCI sources claimed that they had leased a total area of three million square meters from the Ports Authority in 1980 for an amount of SR1 per square meter for a period of 30 years. The JCCI then sublet the area to warehouses and factories at SR4 per square meter. After the expiry of the period, the Ports Authority increased the rate from SR1 to SR15 per square meter. The JCCI in turn increased the rent from SR4 to SR90. According to JCCI sources, the new rate includes SR45 for services and utilities it provides to the buildings in the area and remaining SR30 as profit.
Warehouse owners have demanded the warehouse zone, which is known as the first city of warehouses in Jeddah, be relocated and ownership transferred from the Ports Authority to Saudi Industrial Property Authority (MODON). Saleh Bashangar, manager of a factory at Al-Khumra, said there is nothing left from the factory's revenue after rent is deducted. Other owners had similar complaints. “Apart from this, the utility and services being offered by the JCCI in the zone are also very poor. Not to mention the poor infrastructure; roads and passages to the warehouses and factories are in poor condition and overflowing sewage is another serious problem,” he said. Bashangar said those who run warehouses and factories are eagerly waiting for a decision of transferring the zone to MODON. “If it happens, the warehouse city has every chance to get government support amounting to about SR4 billion,” he added.
