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Saudi Arabia urged to cut red tape to boost property market

Country must also help developers to meet its homes target, Emaar says

Saudi Arabia
Image Credit: Bloomberg
Delays in the mortgage law in Saudi Arabia, which was recently approved by the Shura Council, as well as problems with project financing had an impact on new developments.
Gulf News

Dubai: Saudi Arabia must reduce red tape and help developers if it is to meet ambitious targets for new homes, according to the head of Dubai developer Emaar's Middle East unit.

Emaar Middle East chairman Ahmad Al Kulli told a property conference in Jeddah on Sunday that infrastructure and development projects are slow due to rules and regulations imposed by the Saudi government.

Al Kulli compared his company's 7.4 billion riyal Jeddah Gate project — which will provide over 100,000 square metres of office space and 30,000 square metres of shops — with the Burj Khalifa, which Emaar completed in Dubai in 2010.

"The two projects began in May 2005," he said. "Burj Khalifa was opened, while Jeddah Gate is still under construction."

Typically very slow

"Infrastructure and real estate projects in Saudi Arabia are typically very slow due to regulations that are very time consuming," he said.

His comments come on the same day that property consultancy Jones Lang Le Salle released a report on the Jeddah market, which claims that while a large number of housing projects are underway in Saudi Arabia's coastal hub, many are priced far beyond the means of young Saudi families.

"It is a problem," Soraka Al Khatib, Co-Head of Jones Lang LaSalle Saudi Arabia, told Gulf News. "When you look at the market the sweet spot is somewhere between 200,000 riyals and 500,000 riyals, but the products out there are way above that."

Price mismatched with demand

"The most affordable are priced around 1 million riyals, and this is a mismatch with demand."

Speaking of the delays cited by Emaar, he said that the financial crisis had certainly had a role in the slow movement of some projects.

"Most of these projects started right before the financial crisis when there was a big surplus of cash," he said.

Delays to mortgage law, which was recently approved by the country's Shura Council, as well as problems with project financing had an impact on new developments, he added.

— With inputs from agencies

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