Boom time for Saudi real estate market
Riyadh, December 5, 2012
The Saudi real estate market is set to witness a sustained increase in demand and supply within the next few months thanks to the newly-approved mortgage law, said a report.
The upward direction of land prices, despite the strong need for mortgage financing, is poised to bring in a reasonable 20 per cent increase in the prices of residential villas across the Saudi market, particularly in Riyadh and Jeddah, following the hike in the prices of land properties, according to a recent study by property developer Injaz.
The average price index of the Saudi real estate market has held steady, the study pointed out. The projected rise in real estate prices can be attributed to the Kingdom’s strategic location, nature of land and quality of planning, as demand for integrated urban projects continues to help generate new investment opportunities, it added.
Increase in land prices have also driven the prices of residential apartments up, and low and mid-income earners’ residential units and properties witnessed an increase in the rental value buoyed by the strong demand from Saudi citizens and residents, said the Injaz study.
That said, real estate brokers believe that the easy access to residential financing by Saudi nationals through the Real Estate Development Fund will boost demand and supply for residential housing, therefore contributing to the growth of the Saudi real estate market.
Based on the findings by Business Monitor International, the Saudi construction industry is expected to grow by 5.4 per cent by the end of the year, in line with the government’s spending policy aimed at the development of basic infrastructure in Saudi Arabia.
Moreover, as part of ongoing efforts by the Ministry of Housing and the Real Estate Development Fund, a comprehensive strategy has been announced to fund residential projects.
Subsequently, a total of 11,666 housing loans collectively worth SR5.8 billion ($1.54 billion) have been recently awarded for the construction of 14,000 housing units in Eastern, Western and central regions of Saudi.
The study further pointed out that Saudi’s real estate market has maintained its energetic growth pace in the fourth quarter of 2012, as clearly reflected by the growing number of new investment opportunities and a surge in local land purchases, which has helped maintain competitive prices.
Saudi-based real estate experts, on the other hand, emphasized the need to adopt effective policies aimed at market growth, while boosting co-operation between the private and government sectors to drive real estate investments and development projects.
Standard & Poor’s forecasts for 2012 reveal a robust 6 per cent Gross Domestic Product (GDP) growth in Saudi, with $67 billion to be invested in the development of 500 new residential units across the Kingdom.
Injaz pointed out that the major development projects being implemented in different parts of the Kingdom are fuelling real estate activity and have made significant contributions to the Saudi economy.
The increase in real estate demand is poised to keep the market active on the long term, enabling it to better serve the Saudi society with full-service urban projects and residential housing programs, it added.-TradeArabia News Service