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JEDDAH – The Housing Ministry’s plan to construct and finance 280,000 homes and formation of the General Real Estate Authority are expected to bring down house rents all over the Kingdom as the two moves will increase in supply and encourage investors to build more housing units.
The authority will have six important missions, according to experts. They are: monitor market performance and control prices, facilitate investments in housing units, publish real estate indicators and put pressure on prices, monitor share business agreements and settle conflicts, ensure fair competition, and enhance awareness of individuals and investors.
Housing Minister Majed Bin Abdullah Al-Hoqail said 120,000 housing units will be constructed and distributed in phases with private sector support in three years, beginning this year. “We’ll prepare and distribute 75,000 housing plots and provide finance through Real Estate Development Fund and banks to build 85,000 new homes,” he explained.
The minister estimated that total investment in 280,000 units would reach SR120 billion and bring a revenue of SR562 billion to the economy. “It will also create nearly 50,000 direct and indirect jobs and create an added value of SR335 billion,” Al-Hoqail said, adding that the program would help bring down real estate prices and rents to reasonable levels.
Abdul Rahman Al-Qurashi, manager of Al-Khayala Real Estate, said he had noticed fluctuation in rents during the past six months and it differed from one district to another. He said the government’s austerity measures and its decision to cut allowances of public servants have brought down rents by 20 percent after they had reached astronomical proportions.
“The government’s move to make available 280,000 housing units — either by constructing them or providing finance to individuals through banks and the Real Estate Development Fund — will increase supply and bring down rents,” Al-Qurashi told Makkah Arabic daily.
He hoped the new authority would try to enhance awareness of individuals and encourage them to construct or purchase homes suitable for their family and financial condition. Instead of purchasing huge villas, people are likely to purchase or construct small flats to reduce water and electricity bills. “This trend will help Saudis save a lot of money,” he added.
Sulaiman Al-Amran, owner of another real estate company, said the formation of the real estate authority would bring about positive changes in the market, encouraging businessmen to invest in real estate and housing projects and creating an atmosphere for fair competition.
“We’ll have a basis to be followed by all market players. It will contribute to building more housing units, increasing the number of house owners and reducing the number of tenants,” he explained. “We also hope the authority will settle disputes and monitor agreements.”
Naif Al-Sharief, a member of the Real Estate Committee at Jeddah Chamber of Commerce and Industry, believed the new developments would bring down rents. “This decline in rents comes in line with the Housing Ministry’s expectations,” he said, adding that the formation of the authority would reorganize the market and encourage businessmen and businesswomen to invest in the sector.
© The Saudi Gazette 2017
