Mansour Abu Rayash, chairman of the real estate committee at the chamber, said the government’s decision to transfer the power for setting up townships from major municipalities to branch municipalities and regional authorities would not help solve the problem unless there are effective steps to expedite bureaucratic procedures.

There are hundreds of township projects that are pending clearance from authorities concerned across the Kingdom, Al-Eqtisadiah business daily reported Monday.

As per regulations, real estate investors can buy various plots of land in an area and then transform them into a single township. These investors are required to make available all infrastructure and utility services before getting clearance from the municipal authorities concerned for the township projects. Even after spending huge amount of money to fulfill these requirements, they have to wait a long time to get final clearance.

Abu Rayash noted several real estate investors find it very difficult to overcome bureaucratic bottlenecks while going ahead with their real estate projects. He said this has forced several investors even to abandon township projects and turn to other sectors.

According to Abu Rayash, the government’s decision to decentralize power with regard to giving approval for residential townships would serve the interests of the real estate market. “However, bureaucratic delays have dashed the plans of several investors to implement the project on time,” he said.

Abu Rayash noted some municipalities do not have a sufficient number of staff, especially in the departments of planning and surveys to expedite procedures. The department to verify documents of properties at the municipality takes normally three to four months to complete its procedures before transferring the file to the planning department.

“In many cases, these procedures take two or three years before giving clearance to the investor,” he said, while describing these tiring procedures as a major hurdle for implementing several mega real estate projects within the stipulated period of time.

Abu Rayash said most real estate investors had to complete many procedures to get clearance from several agencies and departments such as the Geological Survey Commission, department for flood management at municipality, agencies for the affairs of buildings and projects, as well as departments for building planning, ownership clearance and real estate registration, before getting clearance to start construction work.

“The investors also have to make available infrastructure facilities and utility services such as water and sewage networks, electricity, drainage, purification plant, and health care facility before getting final clearance. They have to spend between SR80,000 and SR90,000 on this for each plot of land,” he said, while adding that nearly 30-34 percent of the cost of the project would be set aside for implementing infrastructure projects such as construction of roads, setting up of gardens and so forth besides 6 percent to implement utility projects.

Abu Rayash also noted there has been a steep hike in the prices of real estate in Makkah. He attributed this mainly to the expansion of residential buildings and subsequent shrinking of vacant land within the borders of the city. The price for a square meter of land reached SR10,000 in various districts while the rate is about SR1 million in some locations of the central Haram area. “There is every possibility prices will increase within the coming few years. It is also expected that Makkah’s real estate sector would make up about half of the real estate market in the entire Kingdom,” Abu Rayash added.