Housing affordability is a growing challenge in the Saudi capital of Riyadh, according to a new report from Knight Frank.
According to Knight Frank’s Urban Futures report – which examined 32 cities around the world – rapid urbanisation in Saudi Arabia has put “significant” pressures on housing markets in the kingdom’s urban centers.
The report added that the affordability issue is likely to get worst in the future as increasing numbers of people congregate in cities to access opportunities.
Additionally, multi-generational household salaries help masking the issue across the kingdom. The report noted that if average salaries are taken into account instead, the affordability of Riyadh’s financial market “changes dramatically.”
“City-wide average affordability statistics are useful but they fail to highlight disparities in housing costs within sub-markets or across the income spectrum,” said Raya Majdalani, research manager at Knight Frank Middle East. “Therefore, eve cities in the ‘most affordable’ quadrant still have room for improvement and may not be affordable to lower income groups.”
Majdalani added that Riyadh “illustrates well the fact that affordability is relative. In fact, the challenge entailed by housing affordability is growing despite the city’s presence in the most affordable quadrant status.”
To address these challenges, Saudi Arabia’s Ministry of Housing has taken a number of initiatives to get Saudi residents on the property ladder such as the ‘Sakani’ programme.
However, the report noted that a “synergistic ecosystem” including education, healthcare and recreation components must be created to ensure future value creation of affordable housing schemes.
In the case of Riyadh, for example, the inclusion of additional healthcare and educational assets in the city would create value for the population and have a direct-impact on the socioeconomic conditions of residents by creating employment.
“Affordable housing schemes are best developed alongside typologies with varying socioeconomic profiles,” said Shehzad Jamal, partner healthcare & education at Knight Frank Middle East. “We believe healthcare and education assets provide an excellent opportunity for cities to partner with the private sector to both service their communities and build economically diverse neighbourhoods.”For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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