Saturday, February 11, 2017

New legislations to boost Saudi real estate market

The Saudi real estate industry is poised to witness solid growth and development in the coming years, thanks to the new legislations on mortgage reforms, the new building code system for the kingdom and the white land tax plan, said an expert.

The current economic trends and surgical budget trims by the consumers have recently impacted the kingdom’s real estate market, according to the Saudi Economic and Development Company (Sedco).

A leading private wealth management organisation in the kingdom, Sedco conducts its business according to Islamic guidelines widely known as Shari'ah.

Sedco Holding Group manages a broad variety of asset classes in real estate. Its diversified portfolio includes shopping centers, hotels, residential communities, office buildings, industrial spaces, and raw land in the kingdom’s major cities.

The big cheer from the home buyers, stated the company, is the recent mortgage reform announcement from the government to revive the industry which include: mortgage cap to 85 per cent; buyer investment/down payment to 15 per cent and offering of number of housing units by the Ministry of Housing.  

These are aimed at boosting the realty market and also the consumer purchasing power, it stated.

According to Sedco, the new legislation will help spur housing supply to get more and more Saudis to own homes, which in itself is part of the National Transformation 2020 and Saudi Vision 2030.

Also the approval of Council of Ministers on the establishment of “Real Estate General Authority” will play a key role in boosting the sector besides the application of “Saudi Building Code” system lauded as a key reform measure in the vast real estate sector of Saudi Arabia.
Commenting on the scenario, CEO Anees Ahmed Moumina, said: "The kingdom’s real estate market is going through a shift. Over the past two years, real estate transactions have declined. We now expect that the recently-introduced white land taxes will help spur housing supply to get more and more Saudis to own homes, which in itself is part of the National Transformation 2020 and Saudi Vision 2030."

According to Moumina, the Saudi real estate industry will witness growth and development in the coming years, citing a solid economy and unrelenting demand from different sectors.

The group operates through an efficient, well-structured network of operating companies and partners, each of which specialised in certain aspects of the real estate industry.

Sedco Development Company develops major greenfield projects, such as the Galleria project in Jeddah, and the Gardenia Residence complex in Jeddah’s Al Salamah 2 district. Al-Mahmal Real Estate Development handles the day-to-day operations and maintenance of shopping malls, residential communities, and projects in general.

Intimaa for Real Estate Services offer real estate brokerage, operations, consultation and valuation, and construction development.

Hattan Tasji, the real estate corporate investments director, said: "The new white land fees will increase the tendency to sell, boosting supply and bringing prices down. Undeveloped land makes up 77 per cent of the total land in Riyadh, 55 per cent of Jeddah, and 60 per cent of Dammam."

"Thus, the main purpose of the fees system is to prompt landowners to either develop and use land or put it up for sale," he stated.

At current population growth rate, demand for residential units in the Kingdom ranges between 150,000 to 200,000 units a year, with some four million new units needed over the next 15 years, as the national Saudi population is expected to grow to 30 million by 2020, he added.-TradeArabia News Service

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