Housing Projects in KSA

Subject: Banque Saudi Fransi - Saudi Arabia Economics: Under construction
Sent: Mar 20, 2011 6:39 PM

Dear all,

The Saudi real estate sector has been the subject of growing interest as the kingdom prepares to introduce a long-awaited mortgage law and property prices continue to rise. Grappling with a persistent shortage of supply, Saudi Arabia’s housing sector will require some 1.65 million new units be built by 2015 to cater to demand among a youth-dominated population.

In this month’s report, “Under construction: Saudi steps up efforts to meet home, loan demand”, we consider the potential impact of mortgage legislation on the real estate sector and examine some of the hurdles facing an industry that struggles to build affordable single-family detached homes for young professionals.

Following are some of the themes tackled in the report:

* Saudi Arabia needs to build 275,000 new units per year as per our estimates to cater to demand through 2015; a shortfall of 375,000 is likely by 2014

* King orders construction of 500,000 housing units with SR250 billion capital, making  state target to build one million new units by 2014 achievable

* The state’s cash injection into REDF will enable a greater number of Saudis to buy homes, but serious issue of price affordability will endure without
broad reforms

* Official home ownership ratio of 62% could come under pressure unless youth gain access to mortgage financing in next decade

* Median price of villas out of reach of most public and private sector employees. Land costs and mortgage terms should become more favourable to bridge this gap.


Best regards,


Chief Economist