And unlike the UAE, which is building as much (if not more) for the majority expat community living and working in the country, Saudi Arabia is interested mainly in one target group – Saudis.
Riyadh in particular is seeing housing growth, with ground work already underway in several masterplan communities.
Drive about 20km out of Riaydh, along King Khaled Road, look to the left and you can see a hive of building activity, with Dar Al-Arkan, Limitless, The Land and Tameer Holding all having developments under way.
All are connected by the 120km long Wadi Hanifa valley, which also cuts through Riyadh.
Another 15 or so minutes drive across takes you to Dallah Albaraka’s Durat Al-Riyadh masterplan community, aimed at those working in Riyadh itself and, once built, the new King Abdullah Financial District, also close to the Wadi Hanifa developments.
While the Hanifa communities are still at a very early stage of development, many properties in Durat Al-Riyadh are taking shape and a big show home is already open for potential customers.
Closer to the city, and just a few minutes outside Riyadh, other, smaller developments are also underway, including Noura, being built by Memar.
The development is made up of two facing rows of 115 duplex and single level apartments, one strip is three storeys high, the other four, with a communal area in the middle.
Saudi Arabia has tight laws on how high buildings can be built, because of privacy concerns, hence the reason most of the country is made up of low-level housing, with the odd high-rise here and there.
But even that is changing, with the government relaxing laws on high rises that will see more built within designated areas over the coming years.
Noura’s design is very ‘un-Saudi’ in its looks, going against the typical design in a country where properties have high walls and plenty of privacy.
These apartments, says Memar CEO Naif Saleh Al Rajhi, are aimed at young Saudis, who have perhaps lived abroad and want a high quality living space, but do not necessarily need the traditional levels of privacy.
He believes Saudi Arabia is on the cusp of its property boom. ‘We are a year away from the boom. Once financing laws [are in place] it opens the door to more customers. There are hundreds of potential customers but they want finance and it’s hard to get from the bank.’
He has signed a deal with Al Rahji Bank, one of the largest in the kingdom, to provide mortgages for Memar developments. (He is a member of the bank’s founding family, so the choice of bank is no surprise.)
Karim Jabbou, CEO of The Land KSA, holds a similar view to Al Rajhi: ‘The Saudi Arabian real estate market will be completely transformed within the coming three years,’ he says.
Newer developments tend to be mixed use, integrated communities, meaning that they will provide much of what people – especially families – need for their lives, such as entertainment, schooling, shopping and work. And they will offer properties across a range of price bands, important considering the number of under 30s in the country.
Abdul Salam, Regional Director GCC for Limitless in Saudi Arabia, said the kingdom needs the many development projects that are underway or have been announced: ‘Saudi Arabia has great potential. People are looking to buy, but the question is what are they looking for.’
As well as its Al Wasl development just outside Riyadh, Limitless plans more developments in the country. The next will be a waterfront project, says Salam. ‘We have a long-term commitment to Saudi Arabia and are being selective about location.’
With so much planned activity, Saudi Arabia is likely to suffer some of the same problems Dubai and Abu Dhabi have faced – so many real estate projects that it becomes difficult to find enough people to build them. And as more projects are announced, and confidence rises, so will prices, making it important that low income families are not left behind.
But with revenues predicted to hit $13.5bn a week from oil alone if the price hits $200 a barrel, the money is there to invest in the country’s infrastructure.
Add to that the low ownership levels in the country, the young population (around 70% under 30 years old) and a growing desire to own, and it is easy to see that for real estate developers, the boom is going to be huge.
Monday, July 14- 2008 @ 10:35 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.