Saudi Arabia: Real Estate Returns To Growth

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Rakesh Kunhiraman, Dubai-based Director of OBG's Consulting Division, said the growth witnessed in prime and emerging localities of the cities marked a turnaround for the Kingdom's two key real estate markets. The economic downturn had pushed down prices, while Jeddah also had to contend with further fall-out from the flash floods which hit the city late last year.

"Figures indicate that both cities are earmarked for tremendous growth, especially in prime residential districts and new growth areas in the north of Riyadh and Jeddah," he said. "We also expect low-cost housing, such as multi-storey apartments, to gain prominence during the coming years as the Kingdom's rapidly growing population stretches demand to an estimated 1.5mn new units by 2015."

Kunhiraman said that the districts of Al Masiaf, Al Muruj, Al Mursalat and Al Ghadir, which are situated to the north of Riyadh's Central Business District (CBD), were generating interest among buyers, while the localities to the north of Jeddah, including the corridor close to the Corniche, were earmarked for growth.

Kunhiraman said that prices in Jeddah's sought-after Corniche were being kept steady  following the construction of a number of high-rise luxury apartments in the area.

While some localities in the south and east of Jeddah have experienced a slight fall in prices, Kunhiraman said he still expected these areas, which are dominated by low and middle-income residents, to influence growth in the sector.

 "The government's draft strategic plan indicates that although Jeddah is expected to grow towards the northern corridor, this will be balanced with affordable, residential developments in the eastern and southern regions of the city," he said. "We expect the low and mid-income section of the population to be the primary demand driver for the residential sector, with affordability playing a key part in growth."

As the sector awaits news on the introduction of Saudi Arabia's new mortgage law, speculation continues to mount about whether supply will be able to meet demand when the legislation is introduced, especially in the affordable housing segment.

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© Press Release 2010