JEDDAH, 7 December 2006 — Real estate research forecasts acute housing problems by 2010 as the Kingdom’s population by then is expected to be 35 million.

In order to address the housing shortage, the Ministry of Economy and Planning announced yesterday that the country should build at least one million residential units by 2009.

According to Aman Jamal, executive director of the real estate development firm Mullak Al-Arabiyah, the housing shortage could become a problem in the future as big as the issue of unemployment among Saudis is today. He also said that economic opportunity would open as the Kingdom addresses the problem.

“All indications show that future growth is in real estate mortgage industry,” he said. “The availability of work is increasing due to the Saudization policy, which leads to more home-purchasing power.”

According to research by Mullak, 3.5 million Saudis are currently working in the labor market. The number is going to jump to 8.5 million within the next 15 years.

“Twenty-two percent of Saudis today pay rent instead of owning homes,” said Jamal. “The billions of riyals spent on rent obstructs national economic development. But if that money were to be directed to home mortgages, it would pump money into real-estate development.”

According to Jamal, the Saudi market needs between SR95 to SR125 billion annually to provide from 145,000 to 165,000 new homes needed to keep up with the population and that 4.5 million housing units will be needed over the next 15 years. He also said that 870,000 units are needed immediately.

Jamal said that the real problem stands out in Jeddah and Riyadh — two of the Kingdom’s largest and fastest-growing cities. He says 70 percent of the units in these cities are rental properties. Mullak is currently working with contractors to develop about 2,000 to 3,000 units per year and Jamal said he expects the company to double this figure by the end of next year.

Muhammad Al-Saeed, a journalist covering real-estate issues for Al-Riyadh newspaper, said that Saudi private companies are investing more outside the Kingdom due to the bureaucratic red tape of developing real estate inside the country.