RIYADH: ABDULLAH MD AHMED
Published — Friday 26 April 2013
Last update 29 April 2013 7:37 am
Around 60 percent of the nearly 20 million citizens of Saudi Arabia live in rented apartments, according to estimates from Corporate Commercial Real Estate Services (CBRE), the world's largest property services firm.
Saudi citizens have complained about rocketing house rents, notably in major towns and cities. A newly married Saudi, 25-year-old Faisal Al-Dakheel, complained about property prices. "It's impossible to set up a home. How can we manage to get SR 4.1 million to buy a house. This price is for a house in a very ordinary neighborhood, not in a well-off area," he said.
He said it costs between SR 60,000 and SR 80,000 annually to rent an apartment near his workplace. "I cannot pay such an amount, it's impossible. So I had to live in a place far from my work at a cost of SR 26,000," Al-Dakheel said.
There are a number of problems with the housing market in Saudi Arabia, most notably the severe shortage of supply, continuous rise in rental prices, speculation on undeveloped land, and the lengthy process to obtain licenses, experts say.
Last week Custodian of the Two Holy Mosques King Abdullah ordered the Ministry of Municipal and Rural Affairs, municipalities and localities, to hand over all developed pieces of land and plots ready for construction to the Ministry of Housing which will, in turn, distribute them to citizens with construction loans.
The decision is an important step to bridge the gap between supply and demand and reduce the cost of land, according to John Sfakianakis, chief strategist at MASIC Investment Company in Riyadh.
There are reportedly some 4 million sq. meters of vacant plots of lands in Riyadh city. One-fifth of this land is owned by businessmen, who are holding on to it hoping prices will rise, experts say.
The CBRE has said that the Saudi Ministry of Municipal and Rural Affairs has distributed 2.2 million sq. meters as land grants. However, no data exists on how these plots of lands have been exploited.