The sudden revival of the real estate market that has seen the entire country gripped with a price fever brings to mind the boom days of the last century when speculation in real estate led prices to jump to levels never before imagined. Take Riyadh as an example. We all know of remote and desolate areas that until recently people never thought would be developed for 100 years suddenly beginning to attract buyers. A journey down any of the capital’s streets will make you realize you have missed out on something. Real estate offices have taken over entire areas of the city. You enter one of them and ask the price of land in one of the newly surveyed areas. The agent tells you it is SR500 per meter. You leave the office and come back a few hours later with an advance payment. To your amazement, however, the agent tells you that since you were in the office earlier, the price has gone up to SR700 per meter. You leave the place frustrated and cursing and return two days later to be greeted by a smiling agent who tells you that you missed the opportunity of your life because the price is now SR900 per meter. In some areas, a meter of land that cost SR700 is now selling for SR2,000. It is a process that lacks any definitive course and continues to defy all market rules.
Billions of riyals are spent on land that will take decades to develop instead of using the money to build factories and set up businesses which would provide employment for Saudis and help revive the economy. Had these amounts been spent on productive projects, we would have been able to provide urgently needed work for thousands of our unemployed youth and give a great boost to our nation’s industrial ambitions.
Those who are engaged in heavy real estate speculation must know that a day may come when prices will suddenly plummet, leading to a market crash. They would then find themselves in a very difficult situation.
There is every reason for worry and if things are left to continue like this, a disaster may strike. Unless the situation is rectified, there is no guarantee the market will experience a sudden fall. By then of course, it will be too late to look for solutions.
