Saudi Property Market Prepares for Renewed Growth Cycle
13 July 2011
The Saudi Arabian government is to spend $70bn on low income housing in the country. This along with the new mortgage law is triggering a believe that the market is set to enter into a renewed up-cycle.
Early last month international real estate investment consultancy Jones Lang La Salle said that they expected the Saudi Arabian real estate sector to see strong growth throughout the rest of this year, and for this momentum to build into 2012 and beyond. The increasingly positive sentiment is also translating into the wider economy, with GDP growth now projected to be 5.7% for 2011.
Residential property market is expected to be particularly strong. This is because Saudi Arabia has a young population, which is growing rapidly, and because Saudi Arabia is suffering from a worsening supply shortage in the housing market -- not least because the prolonged supply shortage has pushed prices beyond the reach of first time buyers.
This is undoubtedly what has triggered the new government spend on social housing. The $70 billion being referred to above will build 500,000 affordable housing units in the country, which will go at least some way to improving the housing shortage. However, a recent report by Banque Saudi Fransi said that 1.65m new residential units would be required by 2015, with the rapidly growing middle class generating much of that demand.