Housing unit prices are set to increase dramatically due to the current shortage of workers following the labor inspection raids that began on Nov. 4.

Many workers have abstained from reporting to work for fear of arrest and deportation.

Abdullah Radwan, head of the JCCI’s contractors committee, said the government’s crackdown has created a shortage in the industry. Coupled with high demand, prices are set to go up by 15 percent in the short-term, according to real estate experts.

However, Radwan believes that the campaign will have a positive impact on the market in the long run.

“Building owners can currently justify increasing rent rates and customers will inevitably feel the impact on prices. However, many contractors are awaiting approval from companies that provide manpower to achieve their housing projects,” Ali Al-Sayed, a marketing manager of a real estate company, told Arab News.

More than 1,200 male and female inspectors have raided markets and public places across the Kingdom to arrest illegal workers and penalize Saudi citizens harboring them.

Numerous construction companies that were largely dependent on an illegal expat work force suspended their projects altogether.

“Construction companies are faced with high costs of building material, land and manpower. There is currently no clear mechanism for controlling housing prices,” he added.

Sources at the Jeddah Islamic Port, which handles the import of most goods to the Kingdom, said that there has been a drop in the import of construction material this year. Experts believe that such a drop has contributed to the slowdown in construction projects.

Ongoing inspection raids have phased out 100,000 of the 200,000 contracting firms registered with the country’s chambers of commerce, local media reported.

The contracting sector is facing enormous challenges, since contractors were set to implement projects estimated at SR3 trillion by the year 2020.

“Housing unit prices will continue increase and projects will continue to be stalled for the foreseeable future,” Abdul Salam Kareem, a local contractor, told Arab News.