The levying of tax on undeveloped land in urban centres across Saudi Arabia will add another SR75 billion ($20 billion) to the government coffers besides bringing down the real estate prices to rational levels and resolving the country's housing problem, according to real estate experts.

The government must implement the law on all undeveloped plots of land across the kingdom without exception, they were quoted as saying in the Saudi Gazette.

The consultative Shoura Council has approved legislation imposing a levy to be paid by the owners of so-called white land - plots within cities often complete with roads, water supply and streetlights that remain empty, they pointed out.

The Shoura council has recommended a tax of 2.5 per cent of the land value.

Pushing owners to build on empty plots or sell them will enable the government to find land in urban areas and avoid construction in desert regions to solve the housing shortage, said the report.

According to the experts, much urban land in the kingdom is owned by wealthy individuals or companies which prefer holding it as a store of value, or trading it for speculative profits, to the process of developing it.

Since most of them use land as an investment, the plots are traded multiple times, inflating prices and disconnecting the land from its development value.

But with the introduction of the new tax, all this would change and spur home building activity, said the report.

As per the data from the housing ministry, the empty plots made up around 40 per cent of the capital city Riyadh in 2013, when the state was spending billions of riyals building homes outside the cities.

Leading real estate experts called for the speedy implementation of the measure.

"The introduction of the new tax was essential to end the monopoly of real estate investors," remarked Mohammed Al Faraj, a realtor based in Riyadh.

"In Riyadh, the white land comprised 49 per cent of the urban area, while in Dammam it was 50 percent and Jeddah 40 per cent," he stated.

"The new law will make keeping plots of land unused for long periods unprofitable and force real estate owners to sell them to avoid taxation. When they start selling the prices will go down to reasonable levels," he added.