Concern over sharp rise in MODON rents

The Saudi Industrial Property Authority (MODON) has decided to increase the rent for land at industrial cities by 100 percent from the beginning of next Hijrah year (Nov. 4).
The rents would see an eventual increase of 400 percent after three years, said an industrial source.
It said industries have to pay SR2 per square meters, instead of SR1 next year.
The rent at major industrial cities in Riyadh, Jeddah and Dammam will be increased by 300 percent in 2015 and 400 percent in 2016, the source added.
The hike in rent was aimed at improving the services being extended by MODON to industries and meeting the cost of infrastructure projects at industrial cities.
But most industrialists have opposed the move, saying it would increase the prices of national products at local and international markets.
“We had requested the authority not to increase the rent but they are not listening to us,” Ahmad Al-Sheikha, an industrialist based in Jeddah, told Arab News.
He said the decision would put additional burden on consumers.
Al-Sheikha urged MODON to take loans from commercial banks or Saudi Industrial Development Fund if it requires money to develop industrial cities, instead of increasing rents that would reduce industrial profits.
Fadhel Albouainain, an economic analyst, supported Al-Sheikha’s viewpoint, saying the rent hike would have a negative impact on the Kingdom’s industrial sector and affect its competitiveness.
“We have to lent all possible support to national industries to compete with others in the global market,” Albouainain said.
Some industrialists wanted the authority to use the additional revenue on further improving services.
Salman Al-Jeshi, deputy chairman of the National Industrial Committee at Asharqia Chamber, said he believed the rent hike would not affect prices of industrial products.
“It will have a limited impact on industrialists,” he pointed out.
Saleh Al-Rasheed, director general MODON, said the revenues of MODON increased to SR352 million in 2012, against SR 304 million in 2011, a growth of 16 percent in revenues.
The number of factories, he added, increased to 4,718 factories with investments reaching more than SR300 billion.

"The most prominent achievements of MODON for this year is the establishment of factories fully equipped for the benefit of small and medium enterprises," Al-Rasheed said.
"MODON has taken this initiative to encourage SMEs.The authority has so far developed 142 million square meters of land at industrial cities."
It aims to reach the total area of developed land to 160 million square meters shortly with the necessary infrastructure and the supporting services.