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Domestic tourism boosts employment of Saudis
By Saudi Gazette Staff
Published in The Saudi Gazette on 31 - 10 - 2009

Favorable market conditions in the Middle East and North Africa region provide tenants and occupiers with opportunities to take advantage of the new, competitive nature of the market, the October edition of Jones Lang LaSalle's MENA House View said.
The report noted that tenant and occupier sentiment has now reached a tipping point and has improved noticeably in the region over the past six months.
The improved tenant and occupier sentiment has been reflected by a ten-fold increase in the level of active and potential demand in Dubai over the past six months.
Though improved sentiment has yet to result in a significant increase in signed leasing activity, Jones Lang LaSalle expects this to occur within the next 6 - 12 months.
Moreover, the report indicated that recovery in demand will be uneven rather than uniform, with clear “winners and losers” in an increasingly forward-looking market focused on location and quality.
Despite increasing vacancy rates, a shortage of such stock is likely to remain.
Proactive owners will recognize the need to cater more closely to tenant and occupier demands.
“The strategies likely to be recommended are rent free periods and other leasing incentives, along with the provision of longer leases for major anchor tenants and occupiers. Some of the more innovative landlords may also offer finance packages to assist with the initial capital expenditure required for fit-outs,” Jones Lang LaSalle said.
The report suggested that an improvement in demand is a necessary prerequisite to attract long-term investors to commercial markets in the MENA region.
Jones Lang LaSalle expects strengthening tenant and occupier demand to convert into increased investor demand later in 2010 - which is shaping up to be the “vintage year” in the current real estate market cycle.
The report further said that a significant component of corporate demand in the MENA region will continue to come from large multi-national businesses.
With almost all the Fortune Top 500 companies now represented in the region, it noted, most of the growth from this sector will come from the expansion of existing occupiers rather than new entrants to the market.
Jones Lang LaSalle research indicates 75 percent of this group of major overseas multinationals currently have representation in the region.
Another sector of the market that has been somewhat overlooked in the MENA region in the past is small-and medium-sized businesses (SME's).
Although multinational companies (MNCs) may have the largest employment on a per company basis - employing upwards of 300+ employees, the number of SME's that employ 20-100 people creates an overall larger employment base.
In Hong Kong for example, 40 percent of employment is attributable to MNCs while 60 percent is attributable to SME's with 98 percent of total business establishments being part of the SME sector.
In planning for the global economic recovery, governments across MENA are recognizing the importance of creating an environment within which these companies can flourish and develop.
“This will be one of the most important factors to increase employment and therefore occupancies in office markets across the region,” the research study said.
The next few years are likely to witness an increase in both the quality and quantity of space being offered to occupiers, with the development of multiple sub-markets and new office formats including mid-to low-rise business parks in addition to high rise CBD space, Jones Lang LaSalle said.


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