White land tax to spur Saudi real estate growth

JLL predict the next white land tax will lead to a fundamental shift in the Saudi real estate market

White land tax is defined as empty land designated for residential and commercial use within the urban growth boundaries in cities across the Kingdom.
White land tax is defined as empty land designated for residential and commercial use within the urban growth boundaries in cities across the Kingdom.

JLL, a leading real estate and investment consultancy firm in the Middle East region, has said the new white land tax will lead to a fundamental shift in the Saudi real estate market.

Jamil Ghaznawi, country manager, JLL Saudi Arabia, said: "The new law will result in a fundamental change in Saudi Arabia's real estate market and help stimulate further development to address the severe shortage of middle income housing."

While it is too early to predict how the market will react, JLL expects the new law to result in several positive changes.

Ghaznawi said JLL would expect the following as a result:

* Some land owners will bring forward plans and begin development in order to avoid the additional tax burden of holding undeveloped land

* Others will seek to sell sites to other developers which should help reduce land values, which have been soaring over the last few years amounting to 30% to 50% of the development cost

* Lower land values will make development more financially viable and therefore stimulate additional activity

* Revenues from the tax will allow the government to undertake additional housing projects with the Ministry of Housing already announcing a number of major projects targeting the affordable housing sector.

White land tax is defined as empty land designated for residential and commercial use within the urban growth boundaries in cities across the Kingdom, the Saudi Gazette reported.

The tax is set to be imposed in four stages. However, no timing has been stated as yet.

Most popular

Awards

Deadline approaches for CW Oman Awards 2020 in Muscat
You have until 20 January to submit your nominations for the ninth edition of the

Conferences

CW In Focus | Inside the Leaders in KSA Awards 2019 in Riyadh
Meet the winners in all 10 categories and learn more about Vision 2030 in this
CW In Focus | Leaders in Construction Summit UAE 2019
A roundup of Construction Week's annual summit that was held in Dubai this September

Latest Issue

Construction Week - Issue 765
Jun 29, 2020