TOP TRENDS
THE FUTURE OF REAL ESTATE IN SAUDI ARABIA
TREND 1
Stimulus package will help to build communities
which was more recently increased to over SR1 trillion. Te implementation of the budget will provide significant support to the real estate sector, on both the supply and demand sides. Te Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud has issued a Royal Decree aiming to improve living conditions for all Saudi citizens. For example, the capital for the Real Estate Development Fund was increased to SR40bn and the limit of the loans provided has risen from SR300,000 to 500,000. Under the supervision of the General Commission for Housing, a project totaling SR250bn was announced
F to build 500,000
residential units in all regions of the Kingdom. Tese initiatives will stimulate construction
activity and increase
supply. While there may be short term inflationary pressures, in the long term these investments will create jobs, increase the standard of living and can improve the social fabric through community building.
John Harris, Co-Head of KSA, Riyadh
office said: “Citizens in the Kingdom of Saudi Arabia have a better opportunity to own their homes than in the past, due to the recent guidance and directives of the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud to build 500,000 housing units in various regions of the Kingdom. Te existing shortage of affordable housing will decrease significantly, while the large scale initiatives provide an excellent opportunity building.”
for holistic community
Soraka Al Khatib, Co-Head of KSA, Jeddah office, said: “Recent initiatives create a massive potential for growth in the real estate sector, but there will be some implementation and delivery challenges. Achieving social objectives, like community building, through the strategic development of residential communities is an ideal opportunity to create public-private partnerships to overcome these challenges”
or 2011, Saudi Arabia announced the largest budget ever at SR580bn,
TREND 2
Government leadership is a catalyst for real estate
by the government, will have a direct and indirect impact across real estate sectors. Direct stimulus will be provided to the residential sector through large scale residential plans from initiatives like the General Housing Authority (500,000 units), National Guard (17,000 units), and GOSI (691 units). Developing new residential communities creates opportunities for retail, which will be further supported by increased consumer spending enabled through recent salary adjustments. More generally, the stimulus will boost economic activity, create jobs, and boost demand for office space. Te government leadership also directly mandates the addition of new civic facilities with plans for 610 new schools and 12 new hospitals and health related facilities. Te successful delivery of all of these initiatives will necessitate effective frameworks from implementation, which will
T require a
diverse range of strategic partnerships with the private sector to ensure social goals are achieved.
he stimulus package and leadership initiatives provided TREND 3
Infrastructure is critical for realising real estate objectives
nvestment in a world class transport infrastructure will create investment opportunities and underpin demand for real estate in KSA. Major long term investments
I in infrastructure and
transport for Airports (6 projects, SR25bn), Ports (2 projects, SR12bn), and Railway (23 projects, SR96bn) improve the competitive advantage, attract
investment, and enable
connectivity within the Kingdom, but also connectivity to the region with KSA as the core. Critically, the infrastructure investment will have a direct impact on real estate through a nation-wide rebalancing by integrating outlying cities and creating new hubs of value, job growth that will augment demand, and generally supporting the growth of all real estate sectors, especially industrial.
28 I CITYSCAPE I JUNE 2011
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