Saudi Arabia is facing a massive shortage of hospitality, office and residential space that could take years to correct, president of Saudi developer Tanmiyat said on Wednesday.
Speaking with Arabianbusiness.com during Dubai’s real estate expo Cityscape, Sulyman Al Majed said there is currently a shortage of around 1.5 million units in the kingdom and that an extra 4.5 million units would be required within the next 15 years to meet growing demand.
“I believe we talk about 10 years of real booming to reach breakeven in demand and supply and even that I don’t believe will be enough,” he said.
Al Majed said offices and accommodation are the areas where there is the biggest shortage, with the rental price for offices in the capital Riyadh having increased around fivefold in recent years and rental prices for housing more than doubling.
This situation was mirrored in cities across the kingdom, according to Al Majed.
He said Saudi Arabia’s booming population is exacerbating the problem.
Currently estimated at over 27 million, the population in Saudi Arabia could double by 2050 fuelled by a continual influx of foreign residents, according to research firm Oxford Business Group.
In an effort to meet housing and office needs, Saudi Arabia has embarked on several massive real estate projects across the kingdom.
UAE-based developer Emaar is overseeing the construction of three mega-economic cities, which are expected to attract upwards of $80 billion in domestic and foreign investment as well as create thousands of jobs.
Prominent Saudi businessman Prince Alwaleed bin Talal has also committed to invest heavily in the real estate sector through his company Kingdom Holdings.
His plans include a mixed residential and commercial project in Riyadh that is valued at $7 billion, and a mixed-use complex estimated to be worth $13.3 billion.
Dubai government-owned developer Limitless last week announced plans $11.98 billion residential project to the north of Riyadh.
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