DAMMAM/JEDDAH/RIYADH – Real estate prices have declined by 15 to 30 percent in Riyadh, Jeddah and the Eastern Province, say market analysts and businessmen. They expect a further decline in prices in the coming months and described the fall as a corrective move to bring things to normal. Four factors are likely to bring down prices in Jeddah. They are: the city's position as a tourist center; it plays host to many conferences and seminars; it's a thriving business hub; and it's located between Makkah and Madinah and attracts a large number of pilgrims throughout the year.
Khaled Barasheed, former chairman of the real estate committee at Asharqia Chamber, said the Housing Ministry was taking speedy steps to reduce the price of real estate products by trying to establish a balance between demand and supply.
"The ministry is not imposing white land tax in order to make money but to make more land available. Things will become clearer by the end of 2017 at the conclusion of the first phase of the new taxation system that targets white lands of 10,000 meters and above," he explained.
New prices of housing units after the merger of real estate owners and property developers will be less than the market prices, Barasheed said.
Ali Al-Jibali, a member of the real estate committee at Asharqia Chamber, said the beginning of taxation on white land in Riyadh would have its impact on the Eastern Province.
He expected market recovery by the end of 2017 as the correcting process would continue throughout the year. "Positive changes in the market will start by the beginning of 2018," he added.
Realtor Abdullah Shihab expected a land price decline of 25 to 30 percent in Dammam in the coming months. "The price per square meter has already gone down from SR1,200-SR1,300 to SR800-SR900. By the end of this year it will reach SR600-SR700," he pointed out. He attributed the fall in prices to an increase in supply. "Property owners wanted to sell their plots at reduced prices to avoid the annual tax," he pointed out.
Abdullah Al-Ahmary, chairman of the real estate pricing committee at Jeddah Chamber of Commerce and Industry (JCCI), expected a 15 percent fall in property prices in the city. "Jeddah is a tourist and business center and is located between Makkah and Madinah. It also hosts a number of conferences and seminars," he explained while highlighting Jeddah's strong real estate market.
"It's premature to make a prediction on the price fall," Al-Ahmary told Okaz/Saudi Gazette. However, he pointed out that demand and supply would play a significant role in fixing prices.
Dr. Abdullah Al-Biluwi, a member of the real estate committee at the JCCI, reported a depression in Jeddah's real estate market and hoped it would recover soon following the imposition of the new tax. He urged the authorities to support real estate owners to develop their properties.
Real estate expert Fahd Al-Sharafi expected a 30 percent decline in prices of villas and flats due to poor liquidity and the economic slowdown. "The real estate market in Riyadh and surrounding areas is still facing stagnation in addition to a fall in prices," he pointed out.
Khaled Al-Mabeedh, a member of the real estate committee at Riyadh Chamber of Commerce and Industry, said Riyadh requires 500,000 housing units against 400,000 in Jeddah.
"Real estate prices will not collapse until the private sector constructs more housing units to meet the growing demand," he pointed out.
"Prices of white land will fall definitely in coming months but it may not benefit citizens as these plots are located away from residential areas," he said.
