Property prices drop 30%

JEDDAH: There has been a drop in property prices by up to 30 percent in some parts of the country, the Housing Ministry reported recently. From the start of the year until May, deals worth SR278 billion were finalized, down 14 percent from the same period last year, a local publication reported recently. Developers say this is an indication that the property market is in recession. Economists believe that low prices are also due to oversupply and low demand. Ramadan and the school holidays have also affected prices in the sector, they argue. Real estate developer Ibrahim Al-Subai said that prices went down in certain regions by 20 percent including north and south Jeddah, Usfaan and Dhaban since the start of Ramadan. In some densely populated areas, prices were down 30 percent, he said. However, they were unaffected in other areas, including along the Corniche and Prince Sultan Highway. Abdullah Al-Ahmari, chairman of the property evaluation committee at the Jeddah Chamber of Commerce and Industry, said the sector is moving through a critical period. He said that prices were down 20 percent in some regions of the country, which was determined by supply and demand. There would be a further slump over the next few months, he said. Data from the ministry showed that there were commercial deals worth SR92 billion concluded in the same period, a decrease of 16 percent in comparison with the same period last year. There were deals worth SR34.4 billion signed during late May and the beginning of June, a drop of 7 percent in comparison with the same period last year when it stood at SR36.8 billion. Residential deals during this period were worth SR22 billion, a decrease of 11 percent, while there were commercial deals worth SR12.4 billion concluded, an increase of 2 percent in comparison with the same period last year. Deals concluded for plots of land took the biggest share at SR31.3 billion, or around 91 percent, followed by those for apartments worth SR1.04 billion. The ministry said most deals were concluded in Riyadh, worth SR6.31 billion, a drop of 6 percent, followed by Jeddah at SR4.33 billion, a drop of 3 percent in comparison with the same period last year. Riyadh had the most commercial real estate deals worth SR5.23 billion, 13 percent less than the same period last year. -arabnews