Gulf Construction Online - Saudis working on $16bn housing plan

Saudi Focus

Saudis working on $16bn housing plan

01 July 2016

The Saudi government is working on an ambitious plan to provide housing to 52 per cent of its citizens under the National Transformation Programme 2020 (NTP) within the next four years, said a report.

The ministry has set aside SR59 billion ($16 billion) for the implementation of 21 key initiatives in this regard, reported the Saudi Gazette, citing Majed Al Hogail, the housing minister.

Al Hogail was addressing a joint press conference along with Minister of Economy and Planning Adel Fakeih, Minister of Health Tawfiq Al Rabiah and Minister of Education Ahmed Al Isa to brief on the four ministries’ roles in implementing the NTP.

Al Hogail said the ministry’s focus was on making real estate an attractive sector for all those concerned with it despite the challenges facing it, stated the report. “The ministry will come out with plans and programmes in the areas of boosting house financing, saving and meeting the demand in the market,” noted Al Hogail.

As part of its plan to address the housing shortage, Saudi Arabia will offer foreign and local property developers partnership deals in a vast housing construction programme that aims to build 1.5 million homes over the next seven or eight years, said Al Hogail.

“We are preparing five or six types of partnerships between the ministry and the developers,” he said. The ministry would support these projects by providing information and help to arrange financing.

A shortage of affordable housing for a young and growing population of about 21 million citizens is one of Saudi Arabia’s biggest social and economic problems. In the past, the government earmarked billions of dollars of state money to build homes. But bureaucracy and difficulties obtaining land kept the pace of construction agonisingly slow, and the plunge of oil prices in the past two years means the government no longer has ample funds to throw at the problem.

So Saudi Arabia is now adopting a different approach, seeking to persuade private investors to design and build housing while the ministry largely acts as a regulator. “We want to catalyse the private sector, to be a partner with it – we want them to play the prime role,” Al Hogail said.

Major Saudi property developer Dar Al Arkan said it was in talks with the ministry on a partnership to build housing. But Al Hogail said Saudi Arabia was also keen to persuade foreign developers to participate because they could provide expertise and more diverse projects. Last month, the government authorised the ministry to seek the assistance of Britain, France and China in the construction programme.