Saudi Arabia’s housing industry is expected to present huge growth opportunities in near future, as there has been a consistent housing shortage in the country.
According to the Egyptian investment bank EFG-Hermes, Saudi Arabia, which is currently facing a housing shortfall of almost 50,000 Units, needs to build approx 160,000 new housing units annually to meet the strong demand arising in the country because of growing population and reducing household sizes, reported
MAKTOOB.
EFG-Hermes expects further growth in demand with the passing of Saudi Arabia’s mortgage law that is being delayed for long. The law is due to be implemented this year. EFG warned that besides mortgage law, factors like soaring oil prices will probably increase property prices in the country.
Especially, the middle income segment of the kingdom is suffering with the most severe shortage of housing units as most of the developers have been concentrating on constructing high-end residential units. Moreover, absence of mortgage law has confined the access of low- and middle-income households to financing.
“We believe prices have been fairly stable over the past year, but we expect them to start to increase again in 2010 and 2011, particularly if liquidity comes back to the market either through higher oil prices, stock market performance or mortgages,” the Bank stated.
A recent research report “
Saudi Arabia Housing Sector Outlook” by leading market research firm
RNCOS states that according to the statistics from the Ministry of Economy and Planning’s 8th Development Plan (2005-2009), the kingdom is facing an acute shortage of housing units and there was an unmet housing demand of 0.27 Million housing units as of the end of 7th Development Plan. Driven by changing industry scenario and supportive policy framework, housing demand is likely to double by 2015, predicts the report.
Moreover, according to the Saudi Department of Economy and Planning, population of Saudi Arabia, presently at around 25 Million, is projected to surge by 8 Million to reach 33 Million by 2020. This will definitely be a big challenge to the Saudi government as far as providing employment and housing is concerned.
According to a Research Analyst at
RNCOS, “Saudi housing sector is well-poised for huge growth in near future. However, with the increasing demand for the low- and mid-priced housing units, builders need to focus on the segment so as to cash in the opportunities in the Saudi housing sector.”
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