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In the last decade, the construction industry has focused on high-rise buildings. However, with the downturn, there is now a renewed focus on housing developments, particularly affordable housing. It seems as if housing shortages across the region have resulted in increased impetus for more housing projects across the GCC.
Saudi Arabia is at the forefront of housing developments, with many projects in the pipeline due to a general shortage that has accumulated over the years, leading to numerous complaints from residents in the Kingdom.
The government, perhaps mindful of the social unrest that has emerged elsewhere in the region, has been quick to respond to the needs of its population.
In March, King Abdullah announced a $67bn plan to build 500,000 affordable homes in different provinces of Saudi Arabia. King Abdullah also pledged to increase funding for housing by $15bn, and transformed the Kingdom’s housing authority into a Ministry, and allocating a budget of $4bn.
“The creation of this new Ministry of Housing should be taken as a sign that the government is determined to create visible results for Saudi households from these initiatives,” said John Harris, co-head of Jones Lang LaSalle Saudi Arabia.
The General Housing Authority is also starting to implement 35 projects comprising 15,000 housing units throughout the Kingdom.
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“The Ministry will hand over the first units of this housing project very soon,” said Shuwaish Al-Duwaihi, the Kingdom’s Housing Minister. King Abdullah also allocated $10bn for the nation’s Real Estate Development Fund, which provides Saudi citizens with housing loans.
As an indication of the extent of the housing shortage faced by Saudi Arabia, Banque Saudi Fransi announced in March that the Kingdom needs 1.65m new homes by 2015 to meet the growing demand. Harris said that the boom in demand will raise project numbers.
“Both the demand and supply side of the housing market are being stimulated, which will generate a considerable increase in the number of large projects,” he said. “Higher incomes are also contributing to the demand in housing,” he added.
Private real-estate investments in Saudi Arabia are anticipated to reach an estimated $150bn by 2012, with north Riyadh tipped to be the part of that city with the most growth potential. Property trade in the region reached as much as $533m last year alone.
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