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Fake companies jack up real estate prices in Eastern Province of the Saudi Arabia

DAMMAM: About 40 percent of the real estate companies in the Eastern Province are fake. These offices are behind the rise of land prices, local business daily Al-Eqtisadiah reported, quoting realtors from the region.

The realtors accused these companies of marketing imaginary projects outside inhabited areas. They asked the police, the Passport Department and the Labor Ministry to organize inspection campaigns against the irregular offices. According to them, illegal foreigners man the offices, especially in the cities of Dammam and Alkhobar.

"The Eastern Province offers the lowest prices in housing, industrial and commercial real estate projects compared to other cities in the Kingdom, such as Riyadh, Jeddah and Madinah," said Talal bin Sulaiman Al-Ghunaim, chairman of Al-Ghunaim Real Estate Group.

He said a number of national and international real estate companies were targeting the Eastern Province because of its cheap land. "This has encouraged fake real estate companies to come to the region and market real estate investment opportunities to gain large commissions," he said.

Al-Ghunaim said by doing so, the fake companies have contributed to increasing the price of land by more than 40 percent over the past two years. "The fake companies follow news about real estate deals in daily newspapers and TV news programs and market the land plots at exaggerated prices," he said.

Al-Ghunaim accused the fake companies of creating a distorted image of realtors and the real estate sector in the region. "As a result of their illegal work, a number of the genuine real estate companies shifted their activities to other regions in the Kingdom," he said.

Adil Al-Madallah, chairman of Al-Madallah Real Estate Group, said the Eastern Province, being a free market, has no restricting rules or regulations. "Therefore anyone can come to the region to work in real estate investments either through marketing of projects or mediating between companies," he said.

He pointed out that more than 40 percent of the real estate companies in the Eastern Province are fake, working only in the domain of marketing and mediation. "They do not have known addresses and are being manned by foreigners or Saudi government employees," he added.

A-Madallah said the fake companies caused immense financial losses to the genuine companies, which have various financial commitments, such as paying salaries and rent. "The genuine real estate companies strictly adhere to the process of Saudization. They also promote national projects and make an effort to attract foreign investors," he said.

He called for the immediate intervention by the authorities to punish the violators and protect the market against intruders.

Ali bin Matroud Al-Anzi, CEO of Al-Jah Real Estate Company called for dedicating an easily accessible location to all genuine real estate companies to establish their offices and headquarters.

© Arab News 2012