Itqan Capital's seminar re-affirms need for more regulated real estate development in Saudi Arabia
- Saudi Arabia: Tuesday, October 09 - 2012 at 14:30
- PRESS RELEASE
Itqan Capital organized a seminar titled 'The Saudi Real Estate Market: Opportunities and Challenges' in Jeddah on 30th September 2012. The prestigous event was attended by a selected group of Itqan Capital's top clientele and specialists in the real estate sector.
Mr. Dahlawi said that the real estate market has witnessed several major developments this year including the establishment of the Ministry of Housing, the allocation of SR250bn for the construction of 500,000 residential units, and the expected enunciation of the mortgage and real estate financing regulations.
He added that the new regulations may not offer immediate and comprehensive solutions for the real estate market issues, reiterating that the major challenge facing the real estate market today is the high land value, which in turn is raising the prices and rents of residential units.
He also emphasized the high growth potential in the Saudi real estate market driven by an annual population growth rate estimated at 2.9%, and high population base of 19.4 million Saudi citizens (as of 2011) of which 66.4% are estimated to be in the age group of 20-40 years . On the other hand, Saudi Arabia has 8.9 million resident foreigners with a mixed demography and a different set of needs in the real estate domain.
Mr. Surakha AlKhateeb, General Manager of Jones Lang LaSalle, stated in his presentation to the seminar guests that rent rates for residential units witnessed climb in 2012 at an average of 10%.
He further commended the role that Itqan Capital and other CMA licensed companies in the Saudi market are playing in providing distinct investment products that enabled a larger segment of investors to enter the real estate market through professionally run and regulated structures.
Mr. AlKhateeb also indicated that the Kingdom requires about one million residential units during the next ten years and expects the market to add about 15,000 residential units by the end of 2012 and about 100,000 during the upcoming three years.
Mr. Dahlawi added: the highly anticipated introduction of the mortgage and real estate financing regulations are expected to considerably contribute in the stablization of the real estate market and land values on the long run. However, these regulations may have the opposite effect on the real estate market in the near term, as the ease of financing could raise the purchasing power of the Saudi citizen while supply of residential units in particular remains relatively weak.
The panelists at the end of the seminar called for higher efficiency in the Municipal approval process, which remain one of the main challenges facing real estate developers in Saudi Arabia, in order to bridge the gap between demand and supply of residential units. They also confirmed the need of the Saudi market for highly qualified real estate development companies in order to improve the standard of the finished product through partnerships with the public sector and the enactment of pragmatic laws and regulations that would eventually attract various capital funding sources.
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