JEDDAH, 7 November 2004 — Just like any other commodity, from crude oil to abayas, housing in Saudi Arabia is a market with producers, sellers, consumers and investors. And just like any other market, a variety of factors — some obvious and some not so obvious — dictate housing supply and prices.
“Since the summer, the real estate market has been slow because of an active stock market,” said Ibrahim Assaqqat, chairman and CEO of Century 21 Wahat Alamar.
Nevertheless, he says that real estate always will be a better investment because it offers tangible and guaranteed return unlike stocks, which are fluid and unpredictable.
“Shelter is a necessity, and there will always be interest in real estate. Even though prices might be high, middle-income families are our main clients, and they are the market movers,” Assaqqat said.
About 85 percent of his clients get loans from banks to enable them to buy homes. “They have no choice because by buying homes they save on paying rent, and the risk of defaulting on a loan installment is reduced because the bank won’t approve a loan unless they are sure of the person’s income,” he said.
Bank loans are a new development. “It’s a new experience, of which banks have recently become aware,” he said. “So we don’t yet know what the long-term effects will be, and not all banks have gone into this market.”
Assaqqat noted certain professions, including doctors, teachers, and employees of big companies and banks, have a better chance of getting approved for a loan. Although men may be thought of as the usual homebuyer, women too are showing interest.
“Women are as interested in real estate as men are. They are aware of the market and like to invest in real estate more than stock because they understand it more, and they develop an emotional attachment to their investment,” he said.
When his company advertises a new project, 90 percent of the calls received are from women. Many real estate businesses, including Assaqqat’s company, have a women’s section with women employees to better serve female clients.
“We get many teachers, doctors and women of inheritance investing in real estate,” said Assaqqat. However, he noted his company gets very few married couples as investment partners. “Some banks have created a program for couples based on both their salaries that allows them to buy a bigger property, but few qualify because usually one of them does not qualify for the loan,” he said.
Assaqqat says property prices are high, but he says market forces drive prices. “It depends on the demand, and there is a demand from large investors and speculators who raise the prices of vacant properties in an exaggerated way, but they get the return on their investment when they build an apartment building and sell or rent each apartment.
“The only viable option for those with limited or middle income is to go far outside the city where there are new developing communities, and the prices are still reasonable. “The demand is more than what is offered, but many young people don’t know what is available and need to be guided,” said Assaqqat.
