“The law, which is expected to usher in a new boom in the real estate sector, would also help put an end to the unscrupulous practice among some real estate development companies as well as individual investors to increase the price of land and homes,” said one realtor.
“They are trying to exploit the situation before the implementation of the mortgage law, which has specific provisions to curb such practices that are prevalent in the real estate market in general and the housing market in particular,” he said, adding that he hopes the law will lead to a forced exit of speculators from the market.
The realtors noted that these people are causing prices to artificially increase at a time when there is a virtual stagnation in the real estate market. They also noted that a large number of youths who belong to the middle-income group are calling for government intervention to make the prices of homes realistic.
Abdul Aziz Al-Anqari, a member of the board of directors of Bunyan International Investment Group, said the prices of real estate, especially houses, are unreasonable as far as middle-income people are concerned.
Faisal Al-Dakheel, an investor in the real estate sector, attributed the rocketing prices of housing units, despite their low demand, to the improper practices of some real estate firms and individual investors.
Iyad Al-Kindi, another investor, said the current stagnation in the buying and selling of land and homes due to the steep hike in prices would force several firms to review their plans and strategies. He drew attention to recent studies showing that the Kingdom needs about 164,000 housing units a year, of which more than 50 percent are in the provinces of Riyadh and Makkah alone.
“The studies also indicate that the Saudi real estate market is poised to see a big boom in the near future in the wake of various government incentives and the creation of an appropriate investment environment to cope with the huge demand for housing units by various segments of Saudi society,” Al-Kindi said.
He added that about six companies with a total capital of more than SR7 billion entered the real estate financing market with the support of the Ministry of Finance in the last few months.
The rapid growth of population has become an impetus for the real estate boom that is being witnessed across the Kingdom. Riyadh is one of the major cities of the world registering a population that has grown by around 4.2 percent over the past 10 years. Its population is expected to reach 7.2 million in 13 years.
According to a study conducted by the Riyadh Chamber of Commerce and Industry, Riyadh needs at least 43,000 housing units costing a total SR13 billion each year over the coming 10 years.
