RIYADH: The real estate sector is upbeat about the recent Cabinet decision to impose a 2.5 percent tax annually on vacant land in urban areas, saying that the move will create investment opportunities and generate employment.

Only a handful of big parties who are clinging on to a wide expanse of land in various areas of the Kingdom, in the hope of making money, will be adversely affected, said a real estate company official.

“The Cabinet decision had an immediate impact on the large real estate development company’s stock prices. Current reports show that three of the largest companies are prone to be severely affected as they own a total of 64 million square meters of land, out of which 64 percent is owned by Dar Al-Arkan alone,” said Abdul Aziz bin Yousef, CEO of a real estate company.

Salman bin Saedan, CEO of another real estate company in Riyadh, said stakeholders in the sector are celebrating the new tax. “Although it may appear unfavorable to some landowners now, the new tax will actually establish more reliable market pricing. This will add stability in the market for landowners, developers and ultimately customers,” he said.

“Liberating land will give developers the opportunity to plan and build homes at modest prices. Our government policymakers had long ago identified urban land to fulfill the housing needs of citizens. Thankfully, the new tax will go a long way in utilizing abundant land lying vacant in our cities.”

Mazen Al-Sudairi, group head of a research firm, said the Cabinet decision will not only help the market, but also the economy. “When the law comes into effect in 180 days, you will notice the difference. The real estate will turn from a sector to an industry, creating employment and investment opportunities,” he said.