Saudi Arabia’s real estate sector is booming mainly thanks to the ongoing repatriation of funds from overseas locations, especially since the 9/11 attacks of 2001 in the United States.
Now with oil prices skyrocketing, there has been an unprecedented rise in the business and investment activity, resulting in new projects in both public and private sectors.
The real estate sector in the region, and particularly across the Kingdom, is currently witnessing a tremendous growth level, according to Solaiman Al-Majed, chairman of the Tanmiyat Group. “The growth is considered the second highest in the world after Shanghai,” he was quoted as saying at a symposium on the region’s real estate held in Sharjah. According to Arab News, the Saudi specialist estimates the current volume of the Saudi real estate sector at about SR20 billion. He also said that the growing prices of oil are the main cause of the booming real estate sector all over the Gulf.
During 2005, the Kingdom’s construction and building materials sector is expected to contribute more than $15 billion to its economy.
In 2003, according to estimates, building materials alone accounted for imports in excess of $4.5 billion and that domestic and international investment in the Kingdom’s real estate exceeded $300 billion.
Higher than expected oil prices in 2003 and positive economic growth rates enabled the Kingdom to increase its 2004 budget allocations for the construction of 3,030 new schools, 3,800 km of new highways and roads, water and electricity, new desalination projects, dams and water and sewage projects, and municipal projects.
Recognizing the need to diversify its economy, Saudi Arabia has introduced initiatives and provided incentives, combined with the relaxation of real estate laws. These steps have benefited the private sector that is investing heavily in residential and commercial building as a consequence of the rapid population growth.
It is estimated that 555,000 individuals will need to be housed each year. The public and private sector developers will also need to build 100,000 residential units a year.