The Eastern Province and Riyadh are expected to unlock more lucrative prospects in the Saudi real estate market in 2013, given the rapid population growth and increasing number of businesses that are in continuous search of full-service projects to provide housing for their employees.
The Eastern Province Municipality and Riyadh Municipality are keen to sustain the ongoing trend in the Kingdom by organizing real estate auctions as an ideal means to sell large-scale land projects.
Catering to both buyers and vendors, real estate auctions are being actively promoted in Saudi Arabia, particularly in the Eastern Province and Northern Riyadh, which are poised to attract more investments in the residential, commercial and tourism segments.
The latest urban developments in these segments are now mainly associated with highly developed industrial cities and advanced infrastructure, including roads, sewer networks and communication, which are all key considerations when organizing a real estate auction.
Experts believe that the steady growth of the real estate market and available liquidity will stimulate more real estate auctions.
The real estate market is seeing better offerings in terms of lands and full-service projects, contributing to the sustained growth of the real estate sector and the national economy, which will ultimately help attract more investors to the Saudi real estate market.
Real estate developers have noted that the rise in real estate auctions in KSA is a healthy trend as urban projects that are fully developed and equipped with basic amenities (e.g. power supply, lighting, water, telephone lines and sewer networks) are encouraging land owners and developers to put up their projects and residential development for public auction.
In this regard, the number of real estate projects is expected to surge in the Eastern Province in 2012, with more than SAR20bn worth of property deals to be sealed. Riyadh, on the other hand, aims to leverage its huge potential as a safe and secure investment environment to help drive auction sales in the Kingdom during Q4 2012.
The Saudi market is particularly in great need of full-service projects, as the project trading volume for the past four years reached nearly SAR4bn in the Eastern Province alone and is expected to increase five times in Riyadh, while registering SAR10bn in Jeddah and SAR2bn in other cities like Al Madina Al Munawara. Auctions are witnessing a significant turnout from real estate, business and industrial investors as well as potential land owners, reaffirming the confidence of local and GCC investors in the huge potential of the Saudi real estate market.
According to an economic consultant in Saudi real estate affairs, KSA’s real estate market has achieved a remarkable performance. For instance, the total value of development plots in the Eastern Province sold through auctions in the last five months of 2012 has reached nearly SAR3bn, or a 20% increase from the same period in 2011.
This shows that the higher the auction index and number is, the higher the trading volume in the real estate market becomes, therefore increasing the number of developed plots to be put up for auction.
To maintain sustained growth in the Saudi real estate market, auctions must achieve a balance between the expectations of end-users and real-estate investors, particularly in terms of pricing. Moreover, real estate financing is expected to hit SAR200bn and gradually increase to reach over SAR300bn in the next five to 10 years.
Omar Al-Kadi, CEO and Managing Director, Injaz Development Co, said: “Auctions have made crucial contributions towards sustaining the growth of the real estate sector in Q4 2012, being the only trusted product by industry players in Saudi Arabia. The growing number of real estate auctions in the Kingdom, particularly in Riyadh and the Eastern Province, reaffirms the dynamism of the entire real estate market and is a factor in addressing problems related to housing and accommodation. In light of real estate regulations and the Saudi Mortgage Law, these real estate auctions will help drive the sales of residential and commercial projects in the region. As such, Injaz expects a significant growth in the real estate market of Northern Riyadh in the short term, especially as ongoing real estate auctions are positioning Northern Riyadh as a one of the leading business, residential and tourist destinations for investors, residents and visitors. Injaz looks forward to launching its Al Gamra 10 project as part of the Al Gamra Project which is strategically located between the north highway and King Fahad Road towards the north on Abu Bakr Road. The 566,000 sqm project will be put up for auction this November.”
Tuesday, November 27- 2012 @ 13:14 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.