Riyadh-The Saudi real estate market has marked a sharp drop of 58.6%, its lowest record in the housing sector in 2016, the result of a significant drop of 56.7% of the total weekly sales settling at SAR1.9 billion (around USD506 million), the lowest weekly level in a decade.
Real estate experts said that this drop in sales is caused by the low demand that followed the implementation of the so-called white land fees regulation, which pushed people who want to buy properties to wait for a real decline in prices.
Hamad al-Dossary, owner of “Giant Construction” for real estate, pointed that the market’s performance is still weak, and is unable to raise sales and control the drop in demand, as a result of the fees.
Dossary noted that the low-valued sales explain the rigidity of the real estate market, saying this problem can be solved only if traders reduced prices to levels that allow people to buy properties, because the persistence of this condition harms all sides.
The investor needs liquidity and the buyer seeks ownership and stability.
The owner of “Giant Construction” continues that with the government pressure in issuing many influential decisions, mainly fees on white lands, real estate experts will never be able to keep pace with the current wave while the government continues to adopt laws and legislation that raise price rates.
The local real estate market kicked off its activity for the third quarter by a significant drop versus a surge in offers to sell lands and properties.
Real estate expert Abdullah al-Mheisen said that despite the drop in the sector’s sales, the current year has witnessed a remarkable decline in price rates, which means that the market is in its right path because the purchase drop will be followed by a bigger fall in value based on the offer-demand theory.
The expert said that the Saudi government is exerting all efforts to control the real estate sector through legislation and projects that aim at containing the market which suffers from a very hard condition in spite of the rise in demand, considering that the new fees will be the real test for the drop rate.
Ali al-Tamimi, CEO of Jabrah Real Estate Company, said the government’s announcement over the availability of 100,000 residential units, which are ready to be delivered, brings strong competitiveness to the commercial sector that should reconsider its projects and strategies, and to work on building units with affordable prices, noting that the government’s launch of similar projects is considered a means of pressure on the private sector.
Tamimi added that the national real estate market cannot endure more decline in its activity especially that it will move toward rigidity if the gap between price rates and buyer capacity persists.