Saudi Arabia » Market Report

Saudi banks pumped 13.4 billion Saudi riyals into real estate projects in the Kingdom during the first half of 2006, according to sources at the first Euro-money Saudi Arabia Housing Finance Conference.

The conference, which was held in Riyadh, brought together delegates from government ministries and agencies.

One official at the conference noted that the housing market in the Kingdom will be shaped by demand from a new generation of middle class Saudi's, rather than led by investment.

To meet that demand, Saudi Arabia will need to build 1.5 million new homes by 2015. The Saudi government is already working to push the real estate sector ahead.

Real estate is the fastest growing sector in Saudi Arabia with more than SR1 trillion in investments. The growth is said to be the second highest in the world after Shanghai.

The housing market in the Kingdom is set for a major upturn. Market dynamics show that demand is outstripping supply. In fact, according to Dar Al-Arkan, in the middle income sector alone, a shortfall of 50,000 residential units is projected over the next few years.

The Foreign Investment Act provides equal rights to the investment license holders regardless of their partnership percentage. The Foreign investor can own a larger percentage than his Saudi partner, however not less than the minimum percentage required under the Act governing the companies in Saudi Arabia which is minimum 5%.

According to Article (6) Item (3) of the Executive Rules of the Foreign Investment Act, the license applicant should be a person who has come to the Kingdom for the purpose of investment. A non-Saudi resident is, therefore, ineligible to become a foreign investor.

International Property Brokers forecast that the Saudi Arabia will see economic boom in the financial years of 2008 to 2009. This economic boom is due to the best driven government and foreign investments in many areas of the business communities. High prices in the oil market around the world will help Saudi Arabia economy to prosper to the larger extent. International Property Brokers also forecast that the property market will also see a new boom due to the economic stability of the Saudi Arabia. Many developers will see great fiscal opportunities in the real estate business in the country.