The adoption of real estate indicators
to follow up the registered movement
in the real estate sector in its various
forms – whether residential, industrial,
commercial, space lands, etc. – will be of
high importance for market stability and
the stimulation of its trading regardless of
its conditions. This work must be highly
organized to impose its outputs on all
the contracts under implementation,
while these indicators have to rely on
a database and accurate information
which is constantly updated and covers
all the major cities in which there is high
demand for residential, commercial and
industrial units – the matter which will
ultimately move the real estate activity to
a high level of transparency and justice.
Mazaya Monthly Real Estate Report - July 2014
3
The Al Mazaya report says that the distortions
and imbalances recorded by the real estate
market in the GCC States have no limits
at the present time. It pointed to the latest
indicators that are traded among real estate
investors in the Saudi market, showing nearly
970,000 vacant housing units – which are
approximately 17% of the total number of
housing units, estimated at 5.6 million homes.
The traded figures and ratios reflect a defect
with the housing sector in the Kingdom, if
these estimates are true. The real estate
agents fear that poor construction is behind
the rise recorded on the number of vacant
units, while the situation will get worse if the
real estate financing channels imposed more
restrictions on funding in order to avoid any
problems of financing the low quality housing
units. This would lead to a decline in the
quality of its assets and higher rates of default
and non-payment, while the continuous
rise in demand and the rise recorded on
prices form a state of monopoly and control
by property owners due to the inefficiency
of legislations governing the market.
Thus there is the emergence of
difficulties in funding due to the varying
financial capacities of the citizens.
Recently issued reports show the
presence of approximately 400,000 real
estate ownership applications at the Saudi
banks. Therefore their concerns for a
defect in the high prices and low quality
of construction, and the low income of
citizens, are justifiable issues which should
be taken into account when preparing
plans and research in finding solutions. It
is expected that these imbalances would
cause radical changes in the mechanisms,
methods of construction in the future, and
guidance towards real estate development
companies with a good reputation in the
field of construction, and the recorded
distortions would make a large number
of companies reduce their works and
wait for developments in the next period.
It is worth mentioning that despite
the imbalances recorded in areas of
construction, the real estate market still
sees further large and comprehensive
real estate projects and investments, and
55% of citizens look for adequate housing.
This gives the Saudi market the continued
momentum investment to this day, and
requires speeding up the development of
mechanisms to monitor and evaluate the
quality of supplied properties and their
prices, through highly accurate real estate
indicators that give all parties investment
tools with close and real values that can be
funded and invested in all circumstances.
