SR1.5tr needed to build over 3m houses for citizens

Saudi Arabia needs more than 3 million new housing units to meet the demand of its low-income citizens, a prominent Saudi official said, adding that nearly 2 million Saudis are currently waiting for home loans. The Kingdom would require SR1.5 trillion to meet its new housing needs.
“I think the Kingdom currently needs around 3 million houses and this number is not very accurate. There were around 1,300,000 requests from Saudi citizens in the first 36 hours of online applications on the Ministry of Housing’s website.
“This is in addition to the 700,000 who had applied before at the Real Estate Development Fund,” said Abdullah Al-Ahmari, chairman of the real estate evaluation committee at the Jeddah Chamber of Commerce and Industry.
Muhammad Al-Zumai, undersecretary for studies and research at the Housing Ministry, said a mechanism has been set up to determine citizens eligible for housing within the government’s housing scheme.
“We have submitted the mechanism for approval and it is being reviewed by advisory bodies,” he added. Al-Zumai said the ministry is ready in terms of technical capability to prepare a priority list of citizens most in need of housing.
Al-Ahmari said the ministry did not clarify if new housing projects it launched recently were part of the 500,000 units Custodian of the Two Holy Mosques King Abdullah had ordered to build.
Al-Ahmari said the new projects would help bring down skyrocketing house rents. “As soon as the units are built and citizens move into them, this will inevitably bring down the high house rents in the Kingdom. We have been going through a recession since 2011. The cost of construction is globally set at 35 percent of the cost of land. In Saudi Arabia, it's 60 percent,” he said.
Al-Zumai did not specify a date for implementing the under-review rules given the number of government bodies involved in approving it, but added that it would be announced soon.
Al-Zumai said more than 2.6 million Saudis are on the waiting list for house grants, of which more than 500,000 had filed land-grant applications with the Real Estate Development Fund as per the old, replaced house-grant system that made it a condition to be an owner of a vacant plot to qualify for a government housing loan. About 2.1 million people applied within the new system, he said, adding that the approved SR250-billion budget would cover 500,000 houses only.
“The number of applicants exceeds the allocated budget, as they would require SR1.5 trillion to be covered. That’s why the finalized mechanism was made to work on having the existing budget go to those most deserving, being at the top of the list regardless of the date of the application.”
He said there will be a points-system that will include conditions aimed at families, not individuals, who do not own houses, followed by families who do not own adequate homes, those with disabilities and widows.
The ministry is currently constructing homes in 11 regions. The mechanism for allocation has been smoother than it was in past years with the cooperation of six government departments.