JEDDAH, 27 April 2005 — Construction is one of the biggest non-oil sectors in Saudi Arabia and the construction industry is flourishing to meet the needs of the growing population. The total investment in real estate was $19 billion in 2003.
Saudi Arabia is a large market for imported building products. The recent increase in oil prices and the fact that there was an increase in government contracting boosted the construction industry further.
The 2004 expenditure on construction reached $11.2 billion on new public projects, almost double the share for the previous year. However, despite the availability of commercial loans to encourage the private sector to invest in the construction industry some real estate agents and builders said that the construction market in Jeddah was affected recently during the municipal election period. Al-Eqtisadiah, a sister publication of Arab News, reported some constructors opinions in Eastern Province about the recent fluctuations in the real estate market and whether they were generally positive or negative.
Abdulrahman Amoudi, marketing and development manager in the international development of the real estate investments establishment thought that on balance reports that the local elections had an effect on the industry had nothing to do with the downturn.
“Nothing attracts people of all social standards as much as investing and earning money,” he said.
The construction industry was a successful investment for most of the time, he thought. “I don’t see that the municipal elections are behind the slight decline of construction marketing”. He added that the low turnout in the election substantiated his view.
Mohammed Al-Zaidy, real estate selling specialist in Ewa’a Al-Dirah Company for real estate development, held an opposite view. He said that the public media turning its attention from the constructional business to follow the election had a big influence on the real estate market.
“After the election promotion it became clear that a lot of the candidates were real estate dealers; that led to a big stagnancy in the market.” From the positive side, he said that common goal of these election campaigns is to develop and improve cities and urban areas in Saudi Arabia. “I’m very pleased with these election campaigns and optimistic that they will increase the knowledge and awareness of citizens and the officials who may be encouraged to provide community services to all neighborhoods.”
The director of Saqueefat Al-Safa Company for real estate marketing and investment, Mowafag Al-Hashmi, said that the real estate market didn’t record any positive or negative influence indicating that the trading movement frequently experienced periods of stagnation.
Fahhad Al-Harbi the owner of Bait Al-Istethmar for construction development said, “The constructional market is always in an “up and down” condition which has nothing to do with public concern for elections or their distraction with candidates’ programs.” However he thought that the elections might have made a small contribution in the market downturn because some deals were postponed during the election period.
Abdul Aziz Al-Saher, a member of Al-Saher Constructional Group said that if the market was affected it would only be very slight and not worth mentioning, indicating that his group are operating normally without being affected by the elections.
Abdul Aziz Al-Jalalah, owner of Al-Jalalah Group of construction, development and investment, said, “Real estate market in Jeddah is going down and the peoples’ interest in investing in it is declining because people are becoming obsessed by the stock market. The election influence on the market is only limited to the candidates themselves.”
