• Ongoing initiatives implemented by the government aim to reform the housing market and improve access to housing for Saudi families
  • Real estate is a key to the KSA economy, contributing around 7% of GDP, and generating 40,000 job opportunities in 2021.

Riyadh:– PwC Middle East today launched a new report titled, Transforming the Housing Sector in Saudi Arabia which provides insight on Saudi Arabia’s housing market reform programme. The report also identifies the major initiatives included in the programme and the two main key performance indicators targeted to ensure the programme’s successful implementation.

Saudi Arabia’s housing demand was at 99,600 houses in 2021 and is expected to increase by more than 50% to reach 153,000 houses by 2030. In 2017, more than 1.6 million Saudi nationals were on waiting lists for government housing programmes.

The Kingdom has since then developed the “Housing Program in 2018” with the objective of increasing access for Saudi families to affordable, quality, safe, and well-located housing reaffirming Saudi Arabia’s  commitment to addressing challenges including population growth, rapid urbanisation, an insufficient supply of affordable housing, and an unregulated self-build market.

In recent years, the Ministry of Municipal and Rural Affairs and Housing (MoMRA) has worked closely with the private sector to facilitate the journey of ownership, incentivise developers, and provide housing solutions and products that meet the needs of citizens at competitive and subsidised prices, in line with Vision 2030. The report identifies  some of the key initiatives that had a positive impact on the Kingdom’s transformation:

Access to finance

Addressing the barriers created by a high mortgage interest rate environment, this critical dimension directly targets the challenge of unaffordable houses through several government-backed initiatives. Access to sustainable financing solutions remains key with the Saudi Real Estate Refinance Company (SRC) having injected more than SAR 6.5 billion by the end of 2020 with plans to refinance 20% of the Kingdom’s residential mortgage market by 2025. Support from the Saudi Central Bank has also played a crucial role in the sector’s growth with minimum down payment requirements for property purchases being reduced from 30% to 5% of the purchase price in addition to increasing the number of banks offering home loans.

Real Estate development

In addition to improving access to financing, the Kingdom has continued to increase the private sector’s involvement particularly in the development of affordable, quality, safe, and well-located housing. Over the coming decade, the Kingdom will need to create approximately 1.2 million new homes to reach a housing stock of 4.96 million houses by 2030.

Increased regulation

The introduction of a new central regulatory entity for the real estate sector, the General Authority for Real Estate, in 2017 aims to regulate the sector, stimulate investment, and protect consumers. The improved governance helps stabilise the real estate’s rental and buyers’ market supported through initiatives such as Ejar that regulate the relationships between all parties in the rental process. Furthermore, the expected development rate of the real estate market offers an opportunity for off-plan transaction growth which would be supported with additional security through initiatives such as the Wafi Programme which regulates off-plan property sales and rental process and transactions.

Enhanced beneficiary journey

The Saudi housing market’s transformation also focuses on enhancing beneficiaries’ journey. This dimension is critical for addressing low customer satisfaction levels and consists of several key initiatives including the Mulak Programme, Shrakat, and Sakani. These initiatives enhance the partnership between government and private sector to provide solutions and residential products that meet the needs of citizens at affordable price, and digitally enable Saudi homebuyers to apply for their first home online.

Commenting on the report, Imad Shahouri, Middle East Consulting Real Estate Cluster Leader, said: “The Kingdom of Saudi Arabia has made great strides in transforming the housing sector over the past few years. Government-led initiatives have positively reshaped the housing sector across its value chain and increased the homeownership percentages. Under the leadership of H.E Majed Alhogail Minister at the Ministry of Municipal Affairs and Housing, and with the support from key stakeholders in the Real Estate sector in KSA, there will be an abundance of new products, new ways of home ownership, making the housing market more accessible to Saudi nationals. The presence of strong governance frameworks and legislation will be pivotal in maintaining the market’s stability and to the success of this programme. We believe that a strong regulating body coupled with private sector partnerships will drive unprecedented growth across the sector thus enabling homeowners and boosting the economy.”

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