JEDDAH, 7 November 2004 — The dream of owning your own house has become a constant source of anxiety for young people across Saudi Arabia and for heads of households who want to create a stable environment for their families. There are problems with house and apartment pricing, financing and even rental agreements. Perhaps the biggest problem is that for many the wages they’re paid leave them without opportunities to purchase the housing they desire.
“Land and duplexes are in great demand,” said Badr Mokhtar, a young Saudi real-estate businessman, “but because of the prices people are turning to apartment ownership.”
However, apartment ownership has its own set of problems. “For example, let’s say you own the apartment in a building and your ceiling is dripping on you,” Mokhtar said. “Your neighbor on the floor above you will tell you that it’s your ceiling and that it isn’t his problem.”
Another issue is the water. “If the water gets cut off in the building where you own an apartment you’re lucky if your neighbors are cooperative and chip in for the water-shortage. There’s no way out other your paying for the entire building’s water. Furthermore, if anything would happen to the building... That’s it... Your property has literally disappeared into thin air.”
Mokhtar says there may be better options available. “Instead of buying an apartment for SR450,000, you could buy property for SR200,000 and build a single-floor house with the rest for the same amount. But most people object that such land is only affordable and available outside of the city... I say with the city expanding day after day that distance isn’t really that big an issue.”
Mokhtar also wonders if the real-estate business suffers from a lack of competition. “The real-estate business could be described as a mafia,” he said. “In every city, there are big investors who reign over the real estate market.”
For women the business of real estate presents more challenges than pricing. Landlords often prefer to sell rather than rent to women, forcing them to rely on family to help or wind up paying much more money than they wanted to spend — or could afford to spend.
“After my divorce it was hard to convince any landlord to rent me an apartment in his building because I was single,” said Umm Fahd, a divorcee and mother of one. “Even though it’s legal, he made my brothers sign a paper that relieves him of any consequences of me living alone. Can you believe that?”
There are other problems for women, as well.
“It would’ve been easier to buy property but I can’t afford to,” said Zaina Khaled. “Landlords are afraid to rent to single women whether they’re widowed or divorced or single mothers. And then again they’re at a disadvantage even when they do get to rent property because they don’t maintain the buildings.”
Landlords say it’s just a matter of business.
“It’s a problem renting to single women regardless of the details, and it’s bad for business,” said Abu Nasser. “There are more single men than women, and once you rent to women, you’re restricted.”
His neighbor, also an apartment owner and real-estate businessman, said: “Once you sell an apartment or any property to a woman, that’s it; you don’t have any responsibilities or obligations. That’s not the case when you rent them an apartment. Single women living alone in my building? It spells trouble.”
According to a recent report on housing in Saudi Arabia published in Al-Majalla, a sister publication of Arab News, when it comes to investment, the waiting list is long and the private sector hesitates a lot.
A study conducted by the Ministry of Economy and Planning revealed that the population demographics in Saudi Arabia are unique: Those in the 1-14 age group make up 42.9 percent of the whole population; the 15-64 age group makes up 54.1 percent; the 60-and-over age group makes up only three percent of the population. In other words, two-thirds of the country’s population are young people who will be starting families in the years to come, so they will become consumers in the housing market.
The urgency in resolving the issue of housing in Saudi Arabia is underscored by the continued increase in population along with more people moving to Riyadh, Makkah and the Eastern Province. Recent studies showed that these three regions have 64.1 percent of all the occupied housing in the Kingdom: 28.6 percent in Makkah, 21.9 percent in Riyadh and 13.6 percent in the Eastern Province. The other regions complete the list.
Despite setbacks in the government program to provide housing for citizens, the Real Estate Development Fund is still trying hard to collect long-overdue payments from citizens to use for new loans to prospective buyers, some of whom have been waiting as long as 10 years. The resources that the fund receives from the government budget and from loan repayment are not enough to accommodate the increased demand for new loans. The fund is examining a number of options to overcome these obstacles and reduce the waiting period.
Among the possible solutions is to cooperate with commercial banks and financing companies to provide long-term financing for housing based on simple contractual agreements.
Another possibility under review is adopting the system used by some of the larger companies, such as Saudi Aramco or SABIC, which collaborate with the private sector to develop and finance housing projects.
Dr. Ali Al-Namlah, the minister of social affairs, said the Real Estate Development Fund has made great contributions to resolve the housing crisis in its 30 years of existence. In the 1970s, governmental housing projects included granting citizens pieces of land and then giving them real-estate loans to cover construction costs. Then the municipality would develop the site and provide all the essential services.
However, this solution is no longer applicable because of the increase in population and the increasing movement of people into the major cities along with the decrease of available government resources. It takes years for lands to be granted, and then citizens have to deal with very long waiting lists to get a loan and wait for years for essential services to reach the site. Only through the cooperation of real estate businesses, building contractors, financial institutions, government programs and consumers can new solutions be forged to serve the Kingdom’s growing population and economy.