Low oil prices ‘won’t affect KSA housing projects’

Low oil prices ‘won’t affect KSA housing projects’
Updated 27 December 2014

Low oil prices ‘won’t affect KSA housing projects’

Low oil prices ‘won’t affect KSA housing projects’

Projects of the Ministry of Housing will gain from lower oil prices leading to a decline of 25 percent in costs incurred by customers, according to businessmen. They said that service projects have already been tendered for the next financial year at the new reduced prices.
The price decline has been attributed to the lower costs of oil derivatives and raw materials used in the industry.
They stressed that the Ministry of Commerce and Industry imposes strict controls over imported goods and locally manufactured goods, which use imported raw materials. They expected the price of iron to decrease between 20 and 30 percent but said that cement prices would achieve stability because of the large amounts available on the market.
Khalaf bin Hosan Al-Otaibi, an investor in the construction sector, said the rising prices of imported construction materials in past years were the result of high oil prices. The recent fall in oil prices will work in the interest of contractors who implement large projects.
Economist Abdullah Radwan said schemes of the Ministry of Housing will not be affected by the falling oil prices, adding that the challenge the ministry faces is mainly in infrastructure projects. He said there is no crisis in the cement and iron markets as supply surpasses demand, with an estimated cement supply of 63 million tons a year.
Member of the contractors committee in the Madinah Chamber of Commerce and Industry Mohammad bin Odah Al-Baladi said housing projects are developing as planned and the spending policy on them has not been altered. The ready-mix concrete sector is different from the petrochemical construction materials, because the former depends on cement and gravel in addition to other natural materials.
Faisal Al-Aqeil, director of development in Al-Imar Company, said the low oil prices will have a positive impact on the construction industry. He said that low oil prices lead to low fuel prices and low prices of construction materials. Expecting iron prices to go down by 20 to 30 percent because of the low costs of production and raw materials and increased global production, he pointed out that China had increased its iron production and was offering it at lower prices.
As for cement prices, he said the price of fuel, an imported substance, that goes into the manufacturing of cement has gone down as a result of the decreasing oil prices, but the price of local cement is stable because of the large supplies.
Mahmoud Rashwan, member of the Madinah chamber and chairman of the commercial committee, said if oil prices keep falling, the price of land will decrease. He said this decrease will reflect positively globally with regard to costs and purchasing power.
Real estate developer Jamal Farghal said housing projects of the Ministry of Housing and those for private citizens won’t be delayed because of the decreasing oil prices, adding the future of real estate and accommodation is governed by supply and demand.