Al-Mazaya Report highlighted the
challenges hindering the expansion of
middle-class accommodation in major
GCCs cities, mainly the escalating
construction cost and land prices being
the major factors to affect supply in the
region. Competition is yet another factor
to drive companies to choose to offer
high-class residence units as a base to
survive in the real-estate market and
allocates them greater shares of total
demand. This may be clearly observed
from the projects promoted by leading
real-estate companies in the area.
Mazaya Monthly Real Estate Report -
December
2014
3
Al-Mazaya Report adds that this issue
becomes more serious when real-estate
companies calculate their return on middle-
class accommodation projects resting on
the solid belief that it is a Government
responsibility to develop and allocate lands
targeting middle and low income people.
Real-estate companies also argue against
the increase in land prices driving the overall
project cost to hike, eventually preventing
such projects from targeting middle classes
and causing an imbalanced state between
cost-revenue standards. The degree to
which the real-estate market is advanced
and the elasticity of amending relevant rules
and regulations to meet foreign investment
requirements are far more significant
factors often driving the construction of high
class projects that are widely demanded
by investors and business men worldwide.
Taking advantage of CITYSCAPE-Kuwait,
to be held on the seventh of this month,
Al-Mazaya Report speculates the issue
of supply, limited only to certain social
classes, may be resolved when more
projects tailored to a multitude of classes
and members are offered. CITYSCAPE-
Kuwait is also awaited, hoping it will
contribute to creating more harmony
between the overall supply and demand
in Kuwait and the region generally. Al-
Mazaya Report also points to success
stories in neighboring markets which
pushed forward to avail plenty of middle-
class residence projects. The Ministry
of Housing in Saudi Arabia for example,
constructed around 34% of housing
projects allocated to the individuals
eligible to receive them. In real statistics,
the Ministry has constructed more than
162 projects availing around 213 housing
units in view of the lack of residential
units, which exceeds one million units.
This represents an annually increasing
deficit of 10%, which subsequently takes
place with the increase in land prices,
residence units and lack of supply. Striking
data revealed shows the percentage
of Saudi citizens owning their personal
residencies is only 30%; a sign of the]
supply shortage and speculated demand
for residencies all over the Kingdom.
