By Staff writer
Consultancy says National Transformation Plan will improve quality of life while maintaining affordability
Saudi Arabia's plans to bolster its real estate market - part of the ambitious National Transformation Plan - will improve quality of life while maintaining affordability, according to property experts Knight Frank.
The consultancy praised plans by The Ministry of Housing to create its own property company and offer a mortgage guarantee fund to boost the rate of lending.
In a research note, Knight Frank also said plans to introduce a real estate investment trust is likely to attract foreign investments into office buildings, retail centres and hotels.
It said levying a 2.5 percent white land tax on undeveloped land would encourage land owners to develop more homes to the market to tackle the current shortage of housing.
Stefan Burch, head of Knight Frank in Saudi Arabia, said: "Over the medium-to-long term these development strategies are expected to transform cities for the better, improving the quality of life while maintaining affordability and safety of the local communities.
"In the short run, the approval of a white land tax on undeveloped land is expected to see land owners review their holdings and portfolios in order to be well positioned in light of the proposed tax.
"Meanwhile, others might seek to sell their sites which should help reduce land values and consequently make development more feasible. This in turn is likely to increase development activity across the kingdom".
Earlier this year, Saudi Arabia released a set of strategic objectives and key performance indicators aimed at expanding the non-oil economy.
The National Transformation Plan identified the property sector as a key player in diversifying the kingdom's economy and reducing its dependence on oil.
Under the new plan, both the public and private sector are encouraged to take a role in ensuring the growth of the property sector.