CEO of Ewaan says that increased migration from rural areas causing increased demand in Kingdom
A major private sector developer in Jeddah has called on the Saudi government to work with developers to streamline several processes that cause delays in the construction of housing projects and make it difficult to resolve the housing crisis.
According to a report by Arab News, the Kingdom’s leading developers have backed changes to regulations and the mortgage law as they fear a negative impact on their business and financial capabilities.
“Among the limits and challenges facing Saudi developers, is for example the regulations concerning the Municipality’s issuance of licenses, which must have a shorter processing time from the current minimum of at least two years up to a maximum of four years,” said Riyad Ahmed Al Thaqafi, CEO of Ewaan, at an event in the Kingdom.
“In addition, the government should revise the mortgage law further, as we feel that the implementation of the current draft will have a negative effect on developers and financing companies,” he added.
He said that there was a need for the government to appoint an agency that would regulate land prices to stop price escalation and manipulation. Furthermore Al Thaqafi called on the government to change the community culture of a majority of the population’s belief that they need a 200 or more square metre home in order to own a home.
Al Thaqafi said that two factors would affect the housing sector through to 2025. These would be a rapidly increasing population and decreasing income levels. He pointed out that in Saudi Arabia and the rest of the GCC, the main driver causing the housing crisis in major cities was the urbanisation or the migration of rural residents to the cities of Jeddah, Riyadh and Dammam.
“It is expected by 2025 that urbanization will increase the population of large cities by between 52 and 58 percent, causing more demand for housing that very few will be able to afford due to increased inflation and a lower income level,” Al-Thaqafi said.