RIYADH: SHARIF M. TAHA
Published — Friday 3 May 2013
Last update 3 May 2013 9:24 pm
Experts have called for the creation of a “real estate authority” following in the footsteps of the Capital Market Authority (CMA) to draft legislation, safeguard the rights of landlords and tenants and regulate the relationships between the two parties.
Experts have predicted that the real estate market will witness a decline in prices during the next period in light of the recent rulings on the housing sector by Custodian of the Two Holy Mosques King Abdullah. The Ministry of Municipal and Rural Affairs and other agencies will have to hand over all developed pieces of land to the Ministry of Housing which will, in turn, distribute them to citizens along with construction loans.
However, according to experts, the real estate market lacks pricing policies and suffers from the lack of a monitoring body to streamline the market.
Khalid Al-Abd Al-Karim, a member of real estate at the Eastern Region Chamber of Commerce and Industry (ERCCI), said the topic of rental hikes is a thorny issue, adding that no clear-cut polices or procedures exist for determining or redefining housing prices.
He said the market for apartments and villas is controlled by the landlords (owners) in the absence of specific standards to control the pricing mechanism.
To ease the real estate bottleneck, Khalid Al-Abd Al-Karim suggested a series of solutions, including the provision of financial support to land developers, investors and citizens.
Funds for citizens could be tailored to their monthly salaries to either build the unit or buy ready-made apartments. He said the housing allowance for government employees could be exploited to buy housing units or villas if a monitoring body on landlords is created that will prevent them from raising prices, adding that the demand for real estate units, be they apartments, villas or duplexes, has recently witnessed a downward trend because of the insufficiency of liquidity for potential buyers.
Omer Al-Asis, another expert, called for the introduction of a unified policy to determine the prices of real estate units kingdom-wide based on specific criteria including, among others, location of quarters, lifespan of a building and the availability of services such as car parking and other services. He called for strict control on annual rent increases instead of the current random rates dominating the market.
For his part, Mubarak Al-Murri, an investor, stressed the fact that house rents are subject to the supply and demand mechanism like any other commodity. He cited a series of reasons for increases in rent prices, including the absence of legislation governing relations between landlords and tenants which, he said, has led to disputes between the two parties.