JEDDAH: ARAB NEWS
Published — Monday 4 February 2013
Last update 4 February 2013 4:23 am
The value of property deals rose by a massive 65 percent to SR 35 billion last year compared to 2011, according to figures released by the Ministry of Justice, a local newspaper reported.
A total of 25,000 deals were recorded involving 41 million square meters of land.
In 2011, the value of land deals was recorded at SR 15 billion.
Real estate operators and experts say this is a normal increase because of the massive construction taking place across the Kingdom.
They also pointed out that the value of deals rose because brokers were driving land prices up.
Real estate expert Salem Omar Bakshan said that last year was characterized by an "unprecedented boom" in prices, of up to 400 percent, with brokers and land dealers dominating the market.
With the new housing policy of the state involving the approval of the mortgage law and provision of affordable housing, Bakshan predicts that prices will decline by 30 percent in future. He said real estate investments seem to be the "only channel for frozen capital" currently.
Commenting on the same issue, Abdullah Al-Ahmri, chairman of the Jeddah Real Estate Appraisal committee said: "These figures are exaggerated because the market was at a standstill over the last three years." He said there are now large amounts of money being pumped into real estate, the endorsement of housing projects and the support for the Real Estate Development Fund.
He explained that prices increased in urban areas after government gave permission for developers to build residential buildings up to six storeys high. "But the increase is normal on the outer districts of the city."
Another real estate expert, Razen Al-Hwaishi, said that rumors contributed to these hikes in prices, sometimes by more than 200 percent, with the announcement of the construction of towers at King Abdullah Medical City and elsewhere.
Faisal Al-Bluwi, a citizen who lives in Madinah, is hoping prices will drop in his area. "Last year I wanted to buy a piece of land at between SR 150,000 and SR 200,000, but now prices have increased to more than SR 300,000."
Another citizen, Ali Al-Murshed, called on the authorities to intervene to curb price increases. "We have been waiting for more than two months for prices to decline."
Ahmad Hamed Al-Alwi, a real estate office owner in Madinah, said that there was a 30 percent increase in demand for new construction, which "led to a parallel increase in prices."
Another reason for the price hike was the long delays, sometimes taking up to five years, to get a plan approved, said Gazi Qutub, head of the real estate committee at the Madinah Chamber of Commerce and Industry.
Qutub does not see a drop in prices any time soon because there are profits to be made in the sector, unless there is some extreme natural catastrophe or some other crisis. Prices will remain stable if investors start looking to other markets, he added.