JEDDAH, 12 July 2005 — Real estate specialists have confirmed that the quick profits on offer in the stock market have caused the real estate investment to decline. They told Okaz newspaper that it is important to put safe regulations for real estate participation and hoped that banks would give loans to businessmen for real estate investments.
Abdul Aziz Al-Muhareb, chairman of a real estate business company, said, “One of the main reasons that the real estate market is down is because of the stock market. Investors were attracted to the stock market and to the quick revenue it generate. This is due in part to the increase in awareness of stock investment and to economic satellite channels.”
“One role of banks is to finance real estate investment,” said Al-Muhareb. He added, “There are banks that finance real estate investment but the majority of banks do not. This is due to the absence of mechanisms and regulations that guarantees the right to make profit. The financing is limited to number of well-known names in the real estate market because they are long established in the business. Currently, very few are attracted to real estate investment because they are busy investing in the stock market. I predict that real estate investment activities will recover again.”
Meshal Al-Rajhi, member of the real estate committee in the Riyadh Chamber of Commerce and Industry, said that despite the increase in market indicator in 2003, 2004 and 2005, that did not affect the Saudi real estate business because it is the fastest growing market in the world. He said, “In the last year, the stock market achieved good results because of the good market indicators. We have to bear in mind that investors are looking for quick profits for capital investment. Despite that, real estate remains the safest investment channel. We must have a higher authority that cares for the real estate market, to set the rules and protect investors.”
Abdul Aziz Al-Ajlan, president of the real estate committee in Riyadh chamber, said that the stock market affected the real estate business.
He said, “The current damage done to the real estate market is not caused by the stock market but by the absent organizations and the lack of developing real estate construction and project regulations. Some of the rules and regulations are old and unchanged for many years. There are some banks that do not finance real estate projects. I do not blame them because the judicial system bans them from benefiting from real estate mortgage. I wish if there are regulations for real estate investment.”
