Real estate circles are waiting for a decision from the Council of Ministers regarding the allocation and prioritization of the lands available to the citizens through the scheme of “A land and a loan.”
The parties involved in the scheme are mainly the Ministry of Housing, the Ministry of Justice, the Ministry of Municipal and Rural Affairs, the Ministry of Labor, the Saudi Electric Company, and the Saudi Credit Company.
It is expected that the criteria for allocation will include the age of the home-buyer, monthly income, and the number of family members. The new mechanism will determine the eligibility of applicants and the type of subsidy they can get.
Khalid Al-Ghamdi, chief of the real estate community in Jeddah, told Arab News that the new scheme comes at a time when the Kingdom is going through a shortage in the supply of housing units. “We need about SR500 billion to fund the construction of 1.25 million housing units by 2014. However, we expect real estate finance for this year to be around SR60 billion,” he said.
“I believe that the Saudi real estate market is still attractive enough for investors and developers to take even a small chunk of this huge market, especially during this period of slowdown in global markets. The Saudi real estate market is worth an estimated SR1.5 trillion, while the house construction market is worth an estimated SR1 trillion,” he added.
“The real estate and construction sectors in the Kingdom provide the best and most attractive investment opportunities in the region. Currently, more than 285 real estate projects worth SR260 billion are either under way or being planned. The internal demand is the strongest engine of growth for the real estate sector due to the larger size of the Kingdom and increasing population. The current demographics require that we build around 3 million housing units by 2040 to meet the needs of the growing population,” he said.
He expects that when the Mortgage Law is enacted, it will make it easier upon the citizens to own houses in the areas they like, and it will enable the business sector to contribute, in view of the banks’ reluctance to lend those home buyers who want to own a house of their own. “This law will regulate and give a legal status to mortgages. It will be a strong point in favor of the Saudi real estate market. The law will reflect the Shariah teachings with regard to financial transactions,” he said.
