Residents of unplanned flood-hit districts want to move out of their damaged neighborhoods but now face further obstacles because they cannot sell their houses and prices have risen by as much as 15 percent in other, safer areas. In contrast, prices in flood-hit districts have dropped by five percent and there now appears to be no buyers for these damaged properties. Fawaz Al-Juhani, one of the flood victims, said he is unlikely to find a buyer for his flood-damaged house. “The floods damaged my house. There was considerable [movement] in the foundation resulting in the ground floor sinking into the ground. The house's enclosure collapsed completely. It is no longer fit to live in. We thought about renovating the house and renting it out. But I don't expect anyone is interested in buying any real estate or property in the flood-hit districts, especially since these areas are prone to such disasters or they have become a disease zone,” he said. Mrs. Nawal, who goes by the name Umm Abdullah, said she faces similar problems. “I don't intend to return to the apartment I was staying in because the area is threatened by flood hazards, which might happen again. I'm trying to look for an apartment at a cheap price, but the price of real estate is high. This has made it difficult for me to relocate to a better place.” Deals cease Khaled Jamjoom, Chairman of the Real Estate Committee in the 19th session of JCCI and CEO of the Saudi Economic and Real Estate Development Company, expects the real estate deals in the flood-hit areas to stop until the problems and shortcomings of these disaster areas are solved. These areas needed to be protected from the floods, he said. He said this can be done by improving the infrastructure, building floodwater channels and sites for storing water. If this takes place, then these areas can be restructured and re-planned. It would become attractive and prices would rise again, he said. Abdullah Al-Ahmari, Vice Chairman of the Real Estate Committee and Head of Price Evaluation in JCCI, attributed the rise in real estate prices in Jeddah to several reasons: speculative trading, new projects and some investors “fishing in murky waters.” Land plots in north Jeddah are now purchased at higher prices by those investors who believe the land will appreciate in value without performing a detailed analysis, he said. He said these investors are exploiting the floods by raising prices. Many families in flood-hit areas want to move to north Jeddah as it is relatively safe from dangers of flood, but the price is not right for them as land plots in the north are now 15 percent higher, compared to the east, where the prices are rising by about 5 percent. There is more demand for real estate in the north aggravated by daily speculative trading in the billions, he said. Al-Ahmari fears a real estate bubble in north Jeddah will burst soon, just like Dubai. He called upon the official authorities to intervene in regulating the real estate market and associated bank loans to prevent a bubble. Realtor and businesswoman Suhaila Abdul Hameed Jamal said: “In the coming period, we might witness a recession or stagnation in real estate in the flood-hit areas. The period might continue until it is decided on re-planning these areas. As for the rest of Jeddah's districts, the prices are increasing at the rate of 5 percent.” She said this price inflation can be limited with the construction of housing projects, housing units and new planned districts. Liquidity available Issam Khalifa, member of the Saudi Economic Society and Chief Market Planning Specialist, said there is a lot of demand for real estate and all the people are moving towards real estate whether there are plots of land or buildings. As to the disaster that took place recently, Khalifa said it had harmed the southeastern areas and that demand would therefore increase in areas to the north. He said the real estate sector was still seeing a great deal of investment because of the high cost of labor, building material and other factors. There was no demand for investment in the industrial sector, so the majority of investments are taking place in real estate. Among the problems that might face the new planned districts, is the lack of services, he said. Khalifa said that housing needs to be constructed that can accommodate a large number of residents who have a limited source of income. Engineer Abdul Mon'em Muhammad Murad, member of the Real Estate Committee at the Jeddah Chamber of Commerce and Industry (JCCI) said that he believes that real estate in Jeddah is still a worthwhile investment, even after the recent floods. He said that Jeddah's expansion was restricted to the area between the mountain to the east and the sea to the west. “The ideal international trend is always the north or the northwest along the sea. This is considered the best. Therefore, the price and value is higher in the north especially towards the sea, compared to the southeast. The price also depends on the existing infrastructure.” He said that the State would deal with the problem of housing.
