Saudi Arabia to grow despite oil price variations
Construction in Kingdom of Saudi Arabia may slow down due to global fluctuations in crude prices, but the country's economy will continue its growth pattern, JLL expert opines
Following assurances by experts that the UAE's growth is unaffected by recent oil price variations, similar sentiments have been expressed about Saudi Arabia, where the economy is expected to power through even if oil prices slow down the local construction industry.
Jamil Ghaznawi, country head of the Kingdom's operations for intelligence firm Jones Lang LaSalle (JLL) said the country's economy will continue to expand, and drive the real estate sector, despite uncertainties in global crude prices.
"We do not expect a dramatic burst or major price correction," Ghaznawi told local daily Arab News, when asked about the probablity that Saudi's real estate bubble might burst in the near future.
"The level of economic activity is one of the major drivers for any real estate market. We do not expect that the bubble will burst, as there are still other significant drivers in the market, such as local population growth, and increased religious and local tourism."
Ghaznawi remarked banks continue to express confidence in funding real estate projects in the Kingdom.
"There remains interest in financing of real estate projects among Saudi banks. According to Saudi Arabian Monetary Agency (SAMA), the pace of bank lending to the private sector increased by 11.8% in 2014, with a significant proportion of this going to finance real estate developments," he said.
"Bank lending to the real estate sector is expected to increase in 2015, but possibly at a lower rate of growth."