RIYADH, 18 September 2006 — Rapidly rising rents in Riyadh are causing grave concern among long-term residents and newcomers alike. Lessees renewing contracts are shocked at the increases while new tenants say that they cannot find suitable accommodation in the city.
According to a report in Asharq Al-Awsat, annual rents for housing units in the capital increased by more than 50 percent from SR17,000 last year to SR25,000 this year. The city is in need of more than 1.5 million housing units over the next 17 years to house an anticipated 10 million people.
Abdullah Al-Asmari is a typical tenant. “The landlord where I live increased the rent from SR20,000 to SR24,000 without any warning. I have found nothing cheaper than the one I live in now. Most apartments are between SR18,000 and SR20,000 per year.”
Naser Muhammad said that he pays SR25,000 a year and that the prices are high in most of Riyadh neighborhoods. “I have trouble finding a cheaper apartment; the cheaper ones are of a low standard.”
A real estate agent in northern Riyadh said that he did not know what was the real reason behind the increase in prices. “We receive phone calls from many building owners demanding that we increase the rent when renewing contracts,” he said.
Most prices were increased by between SR2,000 and SR4,000 a year. Many refused to renew their contract and left.
Muhammad Al-Khalil, president of the real estate committee at the Riyadh Chamber of Commerce and Industry, denied that there was a housing crisis. The increase in prices was not the result of supply and demand.
“There are other subjects that need studying and once it is done then the real estate market will be better organized and people would be able to find the appropriate place for the appropriate price,” he said.
Many businessmen, he said, were not investing in the real estate sector because of rising construction costs, lack of work force, difficulties in obtaining work visas and the rising prices of construction materials.
Yousuf Al-Tuwaim, expert in real estate affairs, contradicted Al-Khalil and said that there was a real crisis and it was increasing — not only in apartments and villas, but also in offices and commercial shops. He said that the main reason was an influx of families to Riyadh and that the number of families was greater than the amount of real estate available.
“Many families now cannot own homes because the real estate fund has not fulfilled its role even though it did a great job in the past,” he added.
