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Property
boom round the corner in Saudi Arabia
Our Saudi Correspondent
Another round of property boom is expected in Saudi Arabia.
The Saudi property sector will need around $640 billion in
investments over the next 20 years to build five million new
housing units, according to a new strategic plan launched
by Jeddah Municipality. The total investment in the kingdoms
real estate sector will exceed $400 billion this year.
Jeddah alone will need almost a million housing units over
the next 20 years to accommodate the increasing number of
expatriates and an influx of nationals from rural areas.
The new boom is expected to increase the need for more foreign
workers, especially in the construction sector. Most of them
will be sourced from India.
The strategic plan said this can be achieved through the construction
of low-cost housing units. Saudi Arabia is formulating a new
mortgage law which will increase the number property investors
spurring local developers to increase construction of housing
units. The mortgage law is expected to give lenders more rights
including the ability to foreclose on properties in default.
The Shariah-compliant legislation, which has not been finalised
yet, allows lenders to enforce their mortgages by reporting
debtors to a central authority and forcing them to either
repay their debt or vacate a property, according to property
experts.
The real estate sector in Saudi Arabia, which has not been
hit by the economic downturn like in other GCC countries,
plays a vital role in the non-oil economy of the kingdom.
Its contribution to the gross domestic product, which stood
at of 6.8% in 2004, is expected to rise to 7.2% in 2009.
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