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Mon 9 Sep 2013 01:45 PM

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Rising construction costs could hit Saudi housing goals

Lack of supplies, rising wages have pushed up construction costs by 40%, says report

Rising construction costs could hit Saudi housing goals

Saudi Arabia’s ambitious housing goal is under threat as the kingdom struggles to import enough building materials and industry wages rise, according to Arab News.

The kingdom wants to build 40,000 houses and 500,000 properties for low-income citizens to help ease the burgeoning shortage and meet the expected population rise.

Contractors told Arab News, the onslaught of demand for building materials had sent prices up by 20 percent.

There were particular difficulties in transporting iron from the kingdom’s historical trading partner, Turkey, because trucks could not pass through Syria. That meant Saudi iron factories were unable to increase their productivity to meet demand.

"Transportation by sea is very expensive. Most building material companies and factories in the kingdom prefer to transport material by land,” Abdullah Mussaed, a general manger at a building materials company in Dammam, said.

“However, there are many difficulties in importing building material from Turkey by land.

"The high prices of construction material are not limited to the Saudi market alone. There is a global phenomenon of high shipping prices.

“There are consumers demanding that the Ministry of Trade and Industry intervene for controlling rising prices.”

Rising wages in the construction industry also are having a detrimental effect.

Overall, construction costs have increased from SR95 ($25) to SR130 ($34.65) per metre, according to Arab News.

The increasing costs will likely affect the eventual sale price of homes, potentially making the apartments intended for low-income families unaffordable, defeating the purpose.

Some in the real estate industry have said the high costs could see the construction of apartments for low-income families stop.

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