Real Estate business is the biggest and the most profitable of industries in Saudi Arabia. Large tracts of land are undergoing development in various parts of the country. Many of the cities of Saudi Arabia are already looking like what most of the cities in the country would look like tomorrow.
We have at present no official statistics on the position of the real estate market in Saudi Arabia. But experts from the field of Saudi Arabia Real Estate are of the definite opinion that it is the biggest industry in the Middle East, and some of the prices per square foot could be the highest in the world. It is said that real estate activity in the capital of Saudi Arabia, Riyadh, accounts for approximately one third of all activity in the kingdom, which could approximately be in the range of $80 billion.
Studies have been made by people associated with Saudi Arabia Real Estate to estimate how much housing would be required for Saudi Arabia’s ever expanding population. A German company has estimated that there could be a demand for over 300,000 residential houses/units during the next 15 years. It has been calculated that there is shortage of about 225,000 units in Riyadh alone, and therefore the overall number of housing units required could be much higher.
As the economy goes up, so does the requirement of housing. In Saudi Arabia, success of other sectors is reflected by real estate activity which is indirectly or directly dependent on oil revenues. The Government of Saudi Arabia has allocated one of the country’s most ambitious projects to one of the prominent real estate development companies. The plan involves construction of a complete city south of Riyadh. The project envisages providing infrastructure, residential units, and essential services including schools, dispensaries, mosques, and shopping malls.
It is widely acknowledged that Saudi Arabia is the largest real estate market in the entire Middle East but Saudi Arabia real estate brokers and bankers have reported property shortages. This has been attributed to the speculation linked to the sales of plots of land and units during the pre-construction period. Another factor attributed to the cause is the growing demand from the youth.
To put an end to Saudi Arabia real estate speculation, the Saudi Government has banned marketing and presale of building projects which are still in the planning stage. However, you can do this subject to your availing permission from the newly-formed government committee. These speculations have had an effect on rents and property values which sent them spiraling by 30%. This decision was prompted by the need to reorganize the Saudi Arabia real estate market. The Saudi Government has also placed restrictions on the advertising and marketing of property both within and outside the kingdom. It was also decided that a new committee will review Saudi Arabia real estate development applications, the developers’ bonafides, and introduce a code for the construction industry.
Saudi Arabia has noted the collapsing of the real estate industry in Dubai with concern, where off-plan developments have started property speculation. But, the Saudi Government’s continued investment focus on priority sectors of economy (including Saudi Arabia real estate), has shown sustained growth in this sector even in times of recession.