JEDDAH: ARAB NEWS
Published — Sunday 2 December 2012
Last update 2 December 2012 5:31 pm
Apartment rents are likely to fall in the near future and tenants will be able to lease larger houses, according to a recent study.
“It is expected that the Saudization policies of the government and the soft housing facilities offered by the Ministry of Housing will reduce the demand for rented houses and enable Saudis and expatriates to live in more spacious houses,” a statistical study by the National Strategy for Housing, reported.
Charity organizations estimate that more than 70,000 Saudi families do not own the houses they currently occupy, while the Ministry of Social Affairs considers that figure far below the actual demand.
The ministry’s assumption is based on the fact that it provided assistance to 470,000 economically disadvantaged families in 2009, and the number of those seeking assistance has grown significantly since then.
“Unofficial figures regarding the number of Saudis receiving assistance from the minisries of Social Welfare and Labor have crossed the 3 million mark,” the study said.
“The rental market for houses is rather solid and the rate of occupancy is comparatively high. The recent increase in unoccupied apartments can be attributed to the sharp fall in demand from non-Saudi tenants, due to the recent Saudization policies. Non-Saudi tenants are facing a kind of employment recession, which affects the demand for rented apartments.”
Another factor in this recent development is the low-cost housing facilities offered by the Ministry of Housing. This will no doubt affect the demand for rented apartments, since a significant number of Saudi families are likely to shift from rented properties to their own houses,” the study observed.
Saudis who do not own their own houses have several options to acquire a house. They can build houses on the plot they own or buy a house by getting a bank loan. Only a small percentage of Saudis cannot afford to own a house and that is attributed to one of two reasons: Either they do not have an income and savings, or because they are ineligible to benefit from credit facilities, the Al-Hayat daily reported yesterday.
The study also indicated that the lack of demand in the rental market for houses is not above 5 percent in the Kingdom, although the percentage may vary from place to place, or from one season to season. In March last year, the Ministry of Housing was established under the leadership of Shwaish Al-Duwaihi to resolve the massive housing problem in the country, aggravated by the rising population and increase in the demand for housing fueled by expatriates.
The ministry’s short-term projects to face the challenge included building 500,000 housing units at a cost of SR 250 billion in different parts of the Kingdom.
A report by Banque Saudi Fransi last year said private and public developers need to build about 275,000 units a year through 2015 to meet the country’s demands for about 1.65 million new homes.