Saudi sets new rules to streamline handling of state properties
The authority is responsible for the protection and preservation of state properties and determines ways to effectively utilize the assets and make investments
A general view of the cityscape, as the summer season kicks off with health precautions amid the coronavirus disease (COVID-19) outbreak, in an effort to boost internal tourism after the pandemic in Abha, Saudi Arabia July 18, 2020.
By Dimah Talal Alsharif, Arab News
Saudi Arabia - The Real Estate General Authority regulates the state’s real estate affairs and ensures a foolproof mechanism to manage state-owned land and properties.
The authority is responsible for the protection and preservation of state properties and determines ways to effectively utilize the assets and make investments.
A regulation has been recently adopted for the use of the state’s real estate. It allows the authority to set rules for allocating state properties to government agencies or other parties and also cancel such agreements when necessary. The new law governs different aspects such as leasing, sale and investment.
The aim of the new regulation is to streamline the sector and effectively use state properties to finance public projects by increasing the Kingdom’s revenues.
It allows the Real Estate General Authority to enter into agreements on its own or through a company that it establishes in partnerships with others. However, such deals should be approved by the authority’s board of directors.
The regulation also defines different forms of partnerships that the authority can establish.
It allows for an arrangement in which the authority can invest a state property in exchange for a financial contribution from an investor equivalent to the actual value of the real estate.
The authority can establish a company in partnership with other parties and grant that company the right to invest or develop the state’s real estate.
It can also contribute to the capital of an existing company for a share of profits from investment or development in which the state’s real estate is the value of the contribution made by the authority, or even the investment of state real estate through various investment funds.
In addition to these partnerships, the regulation allows the authority to have real estate development contracts by following the standard Build-Operate-Transfer contract model.
Public bidding is now an option to effectively utilize state real estate. Bidders promising the highest annual return or share of project’s income will be selected for partnerships in different projects.
To protect investors from the changed legal landscape due to the new law, the authority is allowed to agree with them an increase in the volume of investment in their projects in exchange for an increase in the duration of their contracts.
However, the investment value should be re-evaluated by an investment committee.
The new regulation will help the authority consolidate its supervisory role. The empowerment of the authority will help effectively regulate the state’s real estate and generate revenue for the Kingdom.
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