US $27.25 billion worth of projects underway in KSA
National Real Estate Commission chairman says KSA laws may also permit foreign ownership
The value of construction projects underway in Saudi Arabia is SR100 billion (US $27.25 billion), according to Khalid Al Gahtani, chairman of the Saudi National Real Estate Commission. In an exclusive interview with Construction Week, he also held out the possibility of a freehold ownership law for foreigners coming onto the statute books in the future. “I believe there exists provision for foreign ownership in Saudi Arabia. Our freehold laws are much clearer than Dubai’s, as we speak today,” said Al Gahtani.
“There is nothing in the laws that does not allow sale of land to non-Saudis or to non-GCC nationals. There are six million expatriates in Saudi Arabia, of which probably 20% call Saudi Arabia their home. They are potential buyers,” added Al Gahtani, who is also the president and chief executive officer of Rikaz, one of the kingdom’s leading developers.
Gahtani rejected the perception in the rest of the Gulf that Saudi Arabia is a slow mover. Whilst the total value of new projects underway is a healthy SR100 billion, there is plenty more to follow, he asserted. “The real estate development sector is doing phenomenally,” Al Gahtani told Construction Week. “It used to be led by the government, but it has exploded over the last five years or so. In 1997, we had seven companies that were into real estate development. Now there are more than 80,” he added.
To drive home his point, Al Gahtani stated: “In 1997, there were some 20 real estate development funds in existence in the kingdom. Now there are more than 500.”
He put the minimum value of each at around US $10 million, which could account for an existing investment pipeline of $5 billion. This is not counting government spend on projects and infrastructure, or spend on real estate development by private sector developers of all sizes.
Developers have their hands full simply meeting demand for new housing units. “There is a gap between demand and supply. For example, in [residential] housing, at even the most conservative estimates, Saudi Arabia will need 1.5 million housing units. That means billions of riyals worth of investments will be needed,” Al Gahtani said.
“This is not only good for the real estate development business, but is it is good for the building materials industry, for cement firms, for the construction sector as a whole,” he continued.
Al Gahtani said the boom in Saudi Arabia is somewhat different from other parts of the Gulf. “While some of the region’s property developments have a dependence on tourism, the very essence of growth in Saudi Arabia is the demand from within. We do not need to import demand. The prospects are very promising,” he said.
Al Gahtani also referred to the ongoing liberalisation and reform process in Saudi Arabia, saying that this will support and encourage the property and construction sector. “The pace of reforms is not necessarily what we would have wanted, but it is happening. We have bottlenecks and we are working on it. The government has recognised [bureaucracy] is a hindrance to maximising [our] potential,” he said.