Riyadh – Mubasher: The Saudi real estate industry is set to witness a “healthy correction” during 2019, following the sharp rise in property prices in the past several years, according to head of advisory at KPMG Al Fozan & Partners in Saudi Arabia Islam Albayaa.

The public and private sectors’ initiatives to enhance this sector are considered the main reason for this notable growth, he added.

"This correction is expected to continue over the short-term, but the market will pick up in the medium to long term, given the recent government initiatives to incentivise the sector, particularly the Ministry of Housing initiatives," Albayaa explained.

In November, the Ministry of Housing launched the ‘Sakani’ programme through which it would provide 19,500 residential units to its citizens. The kingdom also unveiled property projects through public-private-partnerships.

It is worth noting that the establishment of the Riyadh Metro has been seen as a boost and “blessing” for property developers, according to KPMG, as real estate prices rose for developments located close the metro stations.

Other property boosts came in the form of investments by the kingdom’s state-owned Public Investment Fund (PIF), which launched several mega projects that are expected to contribute to boosting the property sector. Among these PIF-funded projects are the $500-billion city NEOM, along with Qiddiya, and the Red Sea project.

"These gigaprojects will promote the property market in the newly developed locations especially the second home concept in the Kingdom. Moreover, some of those projects will introduce new asset classes that will increase the real estate investment alternatives," Albayaa stressed.

"The current economic slowdown and changing mindsets of the youth are driving the new trend. Besides, private investors tend to develop either regular or luxury apartments since they are less price sensitive to the current market volatility," KPMG Al Fozan’s Albayaa concluded.

In November, data compiled by Mubasher indicated the real estate firms listed on the Saudi Stock Exchange’s (Tadawul) registered an overall turn to profitability in the third quarter of 2018, against suffering losses in the same period of 2017.

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