Housing boom might reduce rents
Saudis and expats are still waiting for completion of projects of the Ministry of Housing, which will contribute to reducing prices of housing units in major cities such as Jeddah, Riyadh and Dammam.
These government projects will reduce the high demand of housing units and increase the supply in the local market, according to housing experts.
Abdullah Al-Ahmari, member of the Real Estate Committee at the Jeddah Chamber, said: “Housing units’ prices are still high due to low supply. However, the housing projects of the Ministry of Housing will increase the supply in the Saudi market and force the housing unit owners to reduce their prices.”
Speaking to Arab News, he said: “The gap between demand and supply and the consequent high rentals can be expected to last another three years by which time the Ministry of Housing would have achieved its target of increasing supply of housing units in the Kingdom substantially to take care of the demand side. And this will result in stability in the housing sector.”
High rents that have been increasing for the last five years started creating financial problems for many Saudi families who live in four-room flats. At the same time, a lot of landlords try to attract only expats by building small flats consisting of two rooms that are not proper for families.
Housing Minister Shuwaish Al-Dweihi recently signed agreements to design 82 housing projects in preparation to invite tenders this year. Nine of these projects are in the Makkah region covering an area of 28.1 million square meters.
There are plans to build 18,000 housing units in Jeddah, 360 in Makkah and hundreds of units in Rabigh, Raniya, Taif, Khulais, Yanbu and Mahad, the minister said.
The government’s efforts to build 500,000 low-cost houses at a cost of SR250 billion will help reduce rents and property prices. According to a study conducted by the ministry, the Kingdom requires three million housing units every year.
“This will definitely bring down the prices of land and housing units across the country.
We actually need five million housing units annually considering the increase in population,” said Mansour Aburiyash, head of the real estate committee at the Makkah Chamber of Commerce and Industry.
Finance Minister Ibrahim Al-Assaf said recently: “Every year, we sign new contracts for constructing housing units and payments for them are made from the SR250 billion budget allocated for the purpose.”
He added that the scheme would not be affected by any negative economic developments.