JEDDAH, 9 April 2007 — Real estate investments in the Kingdom have been witnessing a healthy revival in the past five years, which is mainly attributed to the return of capital as well as the soaring oil prices and increase in oil revenues.
The recently introduced regulatory framework covering investment laws for GCC nationals also made freehold investment in the Kingdom highly attractive.
Professionals in the Saudi real estate market affirm that the capital invested in this sector runs into billions of riyals and will likely go up in the light of phenomenal growth and development the sector is witnessing. The reasons behind such optimistic forecasts are varied, but foremost among them is the unprecedented support of the government for its nationals to build their own houses and apartments. Another reason is the high population growth rate which at present stands at 3.5 percent per annum. The current population, which exceeds 22 million, is expected to reach 80 million by 2020, according to a recent report released by the Ministry of Planning.
These predictions have prompted a surge in specialist exhibitions and conferences that focus on the real picture of the Saudi real estate market.
The latest was Saudi Building and Interiors Exhibition, which ended at Jeddah Chamber of Commerce and Industry’s International Exhibition and Conference Center on Madinah Road here over the weekend.
Research and field studies estimate that the Kingdom will need four to five million housing units by 2020 to meet growing demands. To satisfy this demand, it is estimated that around SR117 billion is required to be invested annually in the real estate sector. In order to build these houses and apartments, approximately 110 million square meters of suitable land will be required. The cost of this land alone will be around SR10 billion, according to the present market prices. This situation provides a unique opportunity to local businessmen and also those from the GCC to invest in this lucrative market as the investment will yield good returns in the medium and long term.
A cross-section of local and overseas participants at the exhibition said the five-day event could result into fresh multimillion riyal investments in the real estate sector. “While some deals have firmed up, some others are being negotiated,” Muhammad Maddah, a local businessman in construction material, said.
Cenk Coskn Akandan, who headed a Turkish team of 10 companies at the show, said most of his colleagues signed agreements with local business partners. “Our construction materials including varieties of tiles are in great demand,” he said, adding that the Kingdom has a huge potential for business. The show exhibited a wide range of products and services including building materials and hardware, climate control, construction equipment and tools, electricity and lighting, environmental conservation, marble, granite and stone technology, safety, security and fire prevention, water technology and waste management.
as well as interiors for hotels, office environment, outdoors and landscape design, schools, hospitals, shopping malls and restaurants, aside from villas and apartments.
“We find that safety products are not taken seriously in this part of the world, so we think we have a tremendous scope to educate local people about safety in construction field,” Francois Mounier who represents a French company, Somain Securite, said.
Marco Pescali, representing Italian company Alpactive, said he brought new concepts in preinsulated aluminum ducts, which interested a number of professional visitors. “This was my first exposure to this market and I hope to do lots of business with local partners,” he said.
Hamad Al-Gawini, owner of Algawani for Glass and Mirror who deals in hi-tech aluminum windows and doors, said he had been participating in this expo regularly over the past five years and each time he returned with better business deals than before.
Local businessmen found the show rewarding as they could establish contacts with overseas manufacturers and dealers. “The show has given impetus to our business,” said Michelangelo Minio’s Jeddah-based General Manager Bandar Decor.
Khalid Ahmed Bagedo, owner of Dar Ceramics, was in high spirits to see visitor interest in Dar products. “We manufacture state-of-the-art tiles such as metallic tiles in creative designs. Most of the visitors were pleasantly surprised that such high quality products are made in Saudi Arabia.”
The exhibition, which had a broad spectrum of visitors including engineers, architects, consultants, specifiers and designers, had major participations from Bahrain, Egypt, Jordan, Kuwait, Lebanon, Qatar, Syria and the UAE alongside a large number of local companies including Saudi Basic Industries Corporation, Rajhi Steel, Zamil, Bin Tami, Abdullah Bin Ibrahim, Alf for Electricity, Gehan and Jazira Group Paints, Dar Seramic and Raha.