The prices of housing units are expected to increase up to 15 per cent in the short term, due to the current labour shortage following raids, said a report.

More than 1,200 inspectors raided markets and public places across Saudi Arabia to arrest illegal workers and penalise Saudi citizens harbouring them, said the Arab News report.

The raid has created a labour shortage in the construction industry, as workers have abstained from reporting to work for fear of arrest and deportation, said the Arab News report.

Many construction companies that were largely dependent on an illegal expat work force have suspended their projects altogether, it said.

The campaign, however, will have a positive impact on the market in the long run, according to Abdullah Radwan, head of the JCCI’s contractors committee.

“Building owners can currently justify increasing rent rates and customers will inevitably feel the impact on prices. However, many contractors are awaiting approval from companies that provide manpower to achieve their housing projects,” Ali Al-Sayed, a marketing manager of a real estate company, was quoted as saying.

“Construction companies are faced with high costs of building material, land and manpower. There is currently no clear mechanism for controlling housing prices,” he added.

The contracting sector is facing enormous challenges, since contractors were set to implement projects estimated at SR3 trillion ($799.8 billion) by the year 2020.