Press Release
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The Saudi Arabia property market is experiencing an unprecedented growth in terms of both the volume of investment and the scope and extent of construction activities. This boom is being driven by a combination of factors led by the increasingly urgent demands for residential units – fueled by population and per capita income growth. Other factors are the increased budgetary allocations to real estate projects resulting in the launching of several economic cities, and the growth of religious tourism which is consequently leading to the development of mega projects designed to accommodate the growing number of pilgrims that visit the holy cities. These attractions have opened the door for heavyweight property developers to enter the burgeoning Saudi real estate market who are all vying to have their piece of the pie.
All of these incentives – added to the new investor-friendly legislations – have borne fruit, with several regional companies having announced their entry into the Saudi market with multi-billion dollar projects in 2007, most of which within the residential sectors, a scenario that bodes well for the long term boom in the property sectors with a recent study predicting a need for 5.4 million housing units in the kingdom by 2020. The total new real estate construction in the Kingdom reached SR 484 billion (US $129 billion) by 2010, according to several studies. These figures can be added to the SR 1.4 trillion (US $373 billion) value of investment achieved up to date.
Speaking of his company’s entry into the Saudi property market, Rashid Al Nafisi, Al Mazaya Holding Chairman said: “This up-and-coming sector has received a further boost via the royal initiatives of His Majesty King Abdullah, to launch several economic cities throughout the kingdom. The SR 100 billion King Abdullah Economic City, the Prince AbdulAziz bin Mousaed Economic City in Hail and Knowledge Economic City (KEC) in Madinah in addition to other projects throughout the Kingdom have attracted investors toward the untapped opportunities in this booming sector.
“There is a colossal property market in KSA that has witnessed a rejuvenation of its real estate market following its recent legislative and financial reforms, and the demographic forces that have laid the groundwork for sustainable demand for housing units.”
Al Nafisi added “The issuance of the Freehold Property Law that gives non-Saudies the right to own properties has provided a further momentum to the property industry. The real estate and construction sectors are projected to have a major contribution to GDP growth in the KSA. The other facilities and bonuses in addition to legislative reforms have pushed private sector companies to invest in diverse sectors with intense focus on real estate sectors; this has resulted in large residential, commercial and tourist projects. Al Mazaya noticed that the majority of projects are targeting high income groups, while the demands of medium and low income group have not been given a great deal of attention”.
Al Mazaya has commenced its Saudi entry with the acquisition of a plot of land in Al-Ahsa where it intends to develop a residential project with over SR 400 million cost. Al Nafisi revealed that the company has completed all the necessary procedures to incorporate a new company that will be named “Saudi Mazaya”, and will focus on this giant market. Al Mazaya is studying the potential of developing a series of mega and diverse projects in various cities such as Riyadh and Jeddah while its debut will be in Al-Ahsa.
Al Nafisi added that the property industry in the Kingdom is based on solid foundations that include heavyweight players, huge demand, marketing tools, a promising market and untapped opportunities.
Saudi Arabia has issued a law that entitles expatriates to own property and offered a host of facilities to investors in a bid to attract more foreign investment to support the national economy and revive the related sectors such as construction. This law aims to decrease expatriates’ money transfers. The Kingdom will need an investment volume of US $640 billion in real estate market during the coming two decades, according to economic observers.
