Massive housing projects expected to bring down rents

The government’s efforts to build 500,000 low-cost houses across the Kingdom spending SR250 billion will help reduce rents and property prices, said real estate experts.
“This huge project will have a considerable impact in cutting down house rents, as the ministry has already begun distributing units,” said one expert.
The development of land for real estate and the implementation of infrastructure will have a positive impact on the market.
“This will definitely bring down the prices of land and housing units across the country,” said Mansour Aburiyash, head of the real estate committee at the Makkah Chamber of Commerce and Industry.
He said the ministry should prove its presence by quickly implementing these housing projects.
According to a study conducted by the ministry, the Kingdom requires three million housing units every year.
“We actually need five million housing units annually considering the increase in population,” Aburiyash said. He urged the ministry to meet with realtors and property developers to speed up projects.
However, Aburiyash ruled out any decline in real estate prices in Makkah as a result of huge demand. Apart from citizens and residents, Makkah receives more than five million foreign pilgrims for Umrah and nearly two million foreign pilgrims for Haj.
Housing Minister Shuwaish Al-Dhowaihi recently signed agreements to design 82 housing projects in preparation to invite tenders this year. Nine of these projects are in the Makkah region covering an area of 28.1 million square meters.
There are plans to construct 18,000 housing units in Jeddah, 360 in Makkah and hundreds of units in Rabigh, Raniya, Taif, Khulais, Yanbu and Mahad, the minister said.
Finance Minister Ibrahim Al-Assaf said recently that the government has allocated SR250 billion for constructing 500,000 housing units across the Kingdom.
“Every year, we sign new contracts for constructing housing units and payments for them are made from the SR250 billion budget allocated for the purpose,” Al-Assaf said, adding that the scheme would not be affected by any negative economic developments.
Youssef Al-Shelash, chairman of the Dar Al-Arkan Real Estate Development Co., said the supply of housing in Saudi Arabia might lag demand for at least the next five years, creating lucrative opportunities for developers.
“Official numbers refer to a need for 1.25 million units from 2010 through 2014 and the market has definitely not provided these units, which has led to a rise in prices,” Al-Shelash said.
“Supply remains well below demand, which is expected to rise to four million units in the next 10 years; for developers this is definitely an opportunity,” he added.
About 60 percent of nearly 20 million Saudi citizens live in rented buildings.
Abdullah Al-Ahmari, chairman of the real estate evaluation committee at the Jeddah Chamber for Commerce and Industry (JCCI), cited increasing land prices as a major hurdle in solving the Kingdom’s housing problem.
The Housing Ministry recently launched an advanced electronic platform to streamline renting services, which analysts believe would help reduce rents. The “Ejar” platform offers complete and integrated solutions to the commercial housing sector. It makes renting much easier than before, as it unites parties to a single platform.