50% of land in big cities is vacant

GOOD MOVE: A levy on vacant land is likely to burst the housing bubble.

JEDDAH: Social media websites are abuzz with news about the approval of the fees imposition list by the Council of Ministers on "white", or vacant land.
Real estate expert Abdulhamid Al-Omari said that official data shows that white land account for around 50 to 60 percent of the total land in major cities. He said that the proportion of these plots of land that are actually being used does not exceed 10 percent. However, they have monopolized over 93 percent of real estate deals, which have exceeded SR 2 trillion in value for the past six and a half years.
He said that the huge circulation of money over limited spaces of land has led to high prices as increasing numbers of merchants wish to own these lands, and refuse to sell or develop them. This has led to an empty cycle of land and property inflation, which could lead to very high prices, with an apartment costing as much as SR2.4 million, while a villa could cost up to SR10 million within a span of two years.
He pointed out that after approving the fees list, the situation will be altered because owners won't be able to have the land without conditions or restrictions, and will have to pay fees on their land. The bigger the space, the higher the fees, leaving proprietors with two options: to sell or develop the land, which will increase offers, which stand at 10 percent now. He stressed that if offers increase by 20, 30 or 50 percent or more after the implementation of the list, the monopolies will collapse and prices will decrease even further.
Financial expert and economist Mohammad Al-Suweid said that imposing fees on vacant land will have a positive impact on real estate investment, and facilitates citizens' access to suitable accommodation.
Al-Omari advised property seekers to be careful and wait for the storm to pass and for prices to stabilize. He added that the market has been in a period of decline since 2015 and will witness further decreases under the whip of white land fees, reported Al-Watan.