Good news for residents in Saudi Arabia, as experts in real estate and construction sectors forecast that the year 2009 will witness a drop in house rents. Real estate agents say the house rents that shot up sharply during the past four to five years have already started to stabilize. Ahmad S. Baqalb, member of Real Estate Sub-committee on Paint Industry, Council of Saudi Chambers of Commerce and Industry (CSCCI), said a downturn has already started in the construction sector with more such price cuts expected by 2009. “We expect a price reduction by 30 percent in the cost of paints, 60 percent in iron and similarly in wood, cement, concrete and other construction materials produced locally or imported from outside the Kingdom,” he said. Baqalb, general manager of Saudi Spectrum, was speaking at a function to launch new strategy that his company will follow in the coming years. He said the size of Saudi paint market stood at SR1.5 billion, which is growing at 15 percent rate. The downturn in construction cost will directly reflect in house rents, as 100,000 housing units will be ready by the end of 2009 in Riyadh alone, he said. Urban areas in particular have witnessed an exorbitant rise in house rents that hit hard the monthly meager savings of middle- and low-income class people, both Saudis and expatriates. In Riyadh's Manfouha District the rent for a two-bed apartment rose to SR11,000 from SR8,000 some two years ago. Similarly, a two-bed room house in Hai Al-Wazarat fetched SR2,000 more from a tenant when the landlord increased the rent to SR10,000 from SR8,000. In Olaya, the posh district of Riyadh, house rents skyrocketed from SR17,000 for a three-bed room flat to SR25,000. The increase in housing rents adversely affected those who could not afford because of the fixed housing allowance they receive from their companies. Many people have complained that the companies did not increase the housing allowance despite the rent increase.
