JEDDAH: Issam Khalifa, a member of the Saudi Economic Society, has said that both the public and private sectors have failed in financing housing in the Kingdom and that there is an annual need for the construction of 200,000 housing units. “The construction of homes faces huge challenges,” Khalifa said. “The most significant is the rise in the price of land which has come to constitute 40 percent of the cost of building projects, as well as the poor financing services available and the low number of real estate companies.” He said that the few installment payment programs were available to even fewer clients, bringing interest rates up to 5.5 percent. “The banking sector is the largest financier of real estate loans,” he said. “They provide some SR50 billion a year, and that is forecast to rise to SR75 billion in the next five years.” Khalifa said that the recently-issued Royal Decree creating a Ministry of Housing assuming direct responsibility for all issues related to land for housing in the country along with the orders for housing projects and support of SR40 billion to the Real Estate Development Fund and SR250 billion for half a million housing units would give a “massive boost” to the housing sector. “It will help revive the real estate sector which is a vital focal point in the development process the Kingdom is going through along with the oil sector,” he said. “It will provide jobs and promote activity in the Saudi real estate market which is the biggest in the Gulf region and is intimately related to other facets of society and economic sectors.”
