Real estate prices in Saudi Arabia ‘could plunge 30%’

JEDDAH: Housing prices in the Kingdom will go down 30 percent due to falling oil prices, distribution of more low-cost homes and the imposition of Zakat on vacant land, a real estate expert has predicted. “The real estate market is facing an unprecedented recession and many agents have spoken about falling sales,” said Bandar Al-Aboud, adding that this would result in prices reaching reasonable levels. He said commercial banks in the Kingdom have played a role in hiking prices by granting huge amounts to citizens in long-term housing loans. “This increased liquidity and led to skyrocketing prices.” He said real estate developers and owners are facing pressure to reduce prices. “Most developers have been making profits ranging between 30 and 60 percent because they use low-quality construction materials,” he said. Al-Aboud said he believed the new real estate financing law, which has been approved by the Saudi Arabian Monetary Agency, would solve the country’s housing problem. The government decision to impose Zakat on vacant land inside cities would help bring prices down, he said. About 70 percent of plots in Riyadh are in this category, with 60 percent in the Eastern Province and 50 percent in Qassim, he said. According to one blogger, Khamis Al-Jaary, prices of plots in north Jeddah rose from SR20,000 to SR200,000 per square meter. “After the real estate collapse, it came down to SR30,000. But now prices have gone up again to SR500,000. It’s now time for them to fall again,” he said. Arab News