Due to the huge demand for homes, several businessmen and real estate investors have moved to buy plots of lands to build residential apartments. This has also prompted several small real estate investors and businessmen to join hands in building apartment blocks and sell flats under a lease program ending in ownership, Al-Eqtisadiah business daily reported.

These investors are eager to take advantage of the expected huge demand for apartments in the near future following positive developments in the sector.

There has already been a boom in the real estate sector following the recent royal decree issued by Custodian of the Two Holy Mosques King Abdullah to increase the limit for personal loans from the General Housing Authority and the Real Estate Development Fund from SR300,000 to SR500,000.

The royal decree has contributed substantially to further consolidating the stability of the real estate market. There have not been any major changes in the prices of real estate, both land and homes, since the beginning of the current year, said real estate sources in Riyadh.

The Fund has already scrapped the rule that any borrower must own a plot of land to build a home. It also decided to grant loans to buy homes in case the borrower does not want to build.

Minister of Finance Ibrahim Al-Assaf recently said citizens would be able to own homes costing up to SR500,000.

“In case the price of the property exceeds SR500,000, the balance would be paid by the borrower himself. The second advantage is that multi-story residential apartments would not consume as much space as villas, and hence would not put pressure on the land market,” the minister said.

He added the decision to increase loans to buy homes would produce only a limited impact on land earmarked for residential use.

According to the directive, a citizen can own a home by obtaining a formal letter from the Fund assuring the seller that the outstanding amount would be paid in four installments over a period of three months.

Bandar Al-Qumai, a specialist in administrative and marketing consultancy, described the decision to increase the limit for loans to buy apartments as a positive initiative to enable citizens to own homes.

This would also open the door for real estate investors to build residential apartments and sell them to citizens who obtain loans from the Fund. Al-Qumai said the Fund’s decision to offer loans to buy homes would boost demand, especially among the younger generation.

“This would open up opportunities for both investors as well as those seeking homes. This also helps owners of houses that do not have sufficient space to accommodate their large families to rent their homes out and instead build larger houses by taking advantage of the loan,” he said, adding that there is a chance prices for homes could increase due to high demand and shortage in supply.

“The increase of personal loans from SR300,000 to SR500,000 would enable citizens to realize their dreams of owning houses in the best districts of the capital,” he said, noting that implementation of the new mortgage law would produce a positive impact on the real estate market as a whole.

Khaled Al-Shamlan, who lives at a rented apartment in east Riyadh after getting married three years ago, described the decision of the Fund to increase loans to buy residential units as belated.

“Anyhow, the decision would help youths realize their dreams of owning a house of their own before 21. This helps those who have land but not enough money to build villas as well as those who do not have land to build homes. This is also a blessing for those who have no time to build a house of their own,” he said.

Khaled Al-Horr, a realtor, hoped that the new developments would create an environment for fair competition among real estate investors to make available homes at reasonable prices. He urged authorities to take adequate measures to ensure the quality and standard of homes offered by real estate investors through regular inspections.