JEDDAH — The Saudi real estate development sector index declined by 9.04% the following day after the enacting of the urban lands fees, AlJazira Capital, first brokerage firm in the kingdom, said in its “Real Estate Market Outlook” sectoral report for the month of April 2015. It said sector equities gained 31% since the beginning of the year until the middle of the previous month, with a P/E ratio of nearly 33 times. The report predicted that the “current status of the real estate market, along with the current uncertainty, might discourage capital investment in the short term, and thus banks and financial institutions will be less willing to bear the risks associated with lending investors and consumers in the short term.” It is possible for certain housing segments to experience declines in prices in 2015 with expectations of a slight decrease in prices in the long run, AlJazira Capital report said, pointing out that the residential real estate recovery would happen when the available liquidity rises and when real estate purchasing power increases. Commenting on the current situation of the real estate market, the study indicated that the market is significantly affected by regulatory reforms, and the decision to impose taxes on urban lands will change the market dynamics, and will work to guide direct real estate investment toward the development of lands, Instead of holding land for capital gains. Based on the statements issued from the Ministry of Justice, the study showed that the total number of transactions in residential real estate in major cities declined 33.5% during Q2-1436 from the corresponding quarter of the previous year, as well as 15.02% decline in the total number of transactions for this quarter compared to last quarter. The report highlighted a similar decline in the total value of real estate transactions. And accordingly there was a 38% decline in the total value of real estate deals in Q2-1436 from the same quarter of the previous year / and a decline of around 24.38% from the previous quarter. The average price per square meter also decreased in the three major cities in Q2-1436, where the price per square meter declined 26.88% in Riyadh, 25.10% in Jeddah, and by 19.60% in Dammam compared to the same period last year. — SG
