Real estate sector down 2.86% on move to resolve housing shortage
Shares in Saudi property firms sunk on Tuesday following a cabinet decision to tax undeveloped land in urban areas.
The real-estate development sector fell by 2.86% on the Tadawul exchange, with developer Dar Al Arkan dropping 6.5 percent and Emaar Economic City down 6.60 percent.
However, shares in building and construction firms rose on the news, with the sector edging up 0.88%.
Vast swathes of land in Saudi Arabia are owned by wealthy individuals who have held back from developing on it.
The Saudi Cabinet said on Monday it would impose taxes on undeveloped plots of land within cities in a bid to resolve the housing shortage.
The Council of Economic and Development Affairs was instructed to set out the mechanism to impose fees on vacant lands, although the rate of the tax has not yet been specified.
According to real estate consultants CBRE about 60% of Saudi nationals – or some 10 million people – live in rented accommodation and the rate of Saudi home ownership is about half the global average.