Problems of the real-estate and housing industry

Naif Abdulmohsin Al-Baz, CEO of Deutsche Gulf Finance talks about the housing sector in Saudi Arabia.

Saudi Arabia’s affordable homes policy has been very confusing. The government has announced several times that they are going to build half a million units but then they scraped the plan. Therefore private developers haven’t entered the market because they don’t want to compete with the government and so there is a tremendous lack of properties that are between the ranges of 300,000 to 800,000. What you find is a lot of properties for 1.2 million for which the down payment becomes very difficult to achieve. Also, you have a huge waiting list for the financing from the Real Estate Development Fund; it is about 19 years. There is also a maximum of half a million so it is unaffordable for people to buy properties within the 800,000 mark.

The real estate and housing industry cannot be solved in one year. It is a strategic plan for the government. The government is putting in a lot of effort and coordination with the private sector and the Central Bank in order to promote the housing sector in Saudi Arabia.

There are signs in the market that the housing issue will be resolved within a few years. Saudi Arabia has a clear gap between demand and supply. We think that this supply is going to be gradually built to cover the demand in Saudi Arabia. We have seen changes with respect to the Ministry of Housing however we think that there will be solutions coming from different government entities that can promote the housing sector. It needs all parties´ cooperation, the government the private sector and the people.