In a surprising move, rent prices for apartments and villas shot up by 30 percent, according to real estate experts.
Experts say the rent hikes were due to rising costs of building and renovation, and the increase in the wages of workers in the construction and management of building. In Jeddah, for example, it is the central area that is the highest in rent rates.
It is expected that the rents of apartments in the south and east of Jeddah to drop because the south is no longer desirable as it was in the past, especially due to frequent demolitions of buildings.
Real estate experts expect apartment construction for low-income families to stop because of this unstable situation, as well at the volatile prices of building materials, rising wages in construction and high land prices. The price of construction has increased from SR 95 to SAR 130 per meter.
According to real estate owners, the reasons for the increase in costs is a result of alterations and finishings for many of these apartments are redivided because of the demand on them. But others have different reasons, saying a three-bedroom apartment is rented for SR 20,000.
“I was forced to leave the apartment I lived in for the past five years because of the rent that increased from SR 18,000 to SR 28,000 in less than two years, but I was surprised that everywhere was the same as the other rents were the same,” said Maqboul Hassan.
“In Al-Naseem neighborhood the price rents varies from SR 27,000 to SR 40,000 and I couldn’t afford such prices because its much more than my montly salary,” he added.
Rami Al-Abdalli lives in a small apartment in the same neighborhood and pays SR 30,000 but says his salary is also far below that as the rent jumped by SR 10,000.
He wounders whether if anyone monitors these price increases.
The problem of housing in the Kingdom began with the prosperity age of the 1970s. Many schmes began such as “fast residencies” and “comprehensive residencies” with the different govern authorities taking their fair share of responsibility in the expansion of house construction. The military as well built houses for its personnel and forces.
In 1991, the cost of these housing projects around the Kingdom was SR 126 billion. In Riyadh, there was 39 projects, 16 in Makkah, and 17 in the eastern province.
In 2003-2006 the real estate market witnessed a regression in construction because of the capital that went to the stock market that produced 100 percent profit, which vanished by 2006, and then the market was hit by the world economic recession of 2008. And for the first time inflation in the Kingdom rose by 11 percent over and above rents and foodstuffs especially.
This lead to the absence of any mechanism to stand against high rents in the past five years.