By Elsa Baxter
The kingdom's real estate sector is predicted to grow by 5-7% per year to 2012.
Saudi Arabia’s real estate sector is projected to grow between five to seven percent each year until 2012, according to the latest research.
Fuelled by a strong demand for housing, the kingdom’s real estate investments are set to touch SAR1.125 trillion ($300bn) this year, further rising to SAR1.5 trillion ($400bn) by 2010, a recent study by Global Investment House found.
The study further revealed the real estate sector’s contribution to the country's GDP will reach 7.2 percent in 2009, up from 6.8 percent in 2004.
“Current estimates indicate that the country will need to build around 1.5 million new homes by 2015 to cater to a rapidly growing population, which translates to around 250,000 housing units annually,” said Shahid Bhatti, project manager of Saudi Build at Riyadh Exhibitions Company.
The Saudi Build 2009, the kingdom’s annual construction trade exhibition, will run from October 4 to 7.
“Major cities in particular are witnessing strong growth with Al Khobar having a 25 per cent per cent increase in housing demand, 21 per cent in Jeddah and around 17 per cent in Riyadh,” Bhatti said.
“Over 750 million square metres of industrial land is also poised to be developed within the next decade, along with some 4 million square metres of retail facilities and up to 2.4 million square metres of office space."
The King Abdullah Financial District, destined to be the largest financial centre in the Middle East, with a floor space of around 3.3 million square metres, is currently under construction.
Its a good rising demand of housing but untill and unless a reasonable and favorable mortage laws set for buyers, this mass demand may face obstacles on return on investments. Saudis dont have yet a proper mortgage laws and developers will definetely face problems in getting money back on such huge investments. Smart developers must chalk a long term strategy for ideal win win situation with banks, financial houses in selling and return on investments. Cost of housing is also a barrier in selling to average income saudis with no proper pay back systems set within the country.