Housing Minister Majid bin Abdullah Al-Hogail summarized the obstacles to providing adequate housing at an affordable price into three key areas: land—including its location and amenities— development and the relationship between developers and individual contractors, building regulations and the availability of materials, and financing. This came during the symposium “Housing in the Kingdom: Challenges and Solutions,” organized by the Institute of Public Administration at the King Salman Conference Center at the Institute’s headquarters in Riyadh, with the aim of assessing the reality of housing in the Kingdom and developing solutions to address the obstacles.

Four key areas pose challenges to the sector

Al-Hogail noted that housing problems are linked to four main elements that represent challenges for the sector, which, in a broader perspective, align with the Kingdom’s challenges in this sector; First and foremost is the limited availability of housing units for all segments of society, followed by the efficiency of savings and financing programs in the Kingdom and the resulting weak purchasing power, thirdly, the efficiency of the real estate sector, including its legislation, regulatory authorities, investment in real estate development, and licensing centers, which have impacted investment in the sector and its development, and finally, the importance of the rapid independence of the investment and real estate sector from the state and its lack of direct linkage to the state budget.

120 sectors linked to housing

The Minister of Housing affirmed the state’s interest in the sector and that it is a priority in both short- and long-term plans and strategies, noting that housing was one of the most important elements in the first speech of the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud – may God protect and preserve him – and noted that the housing sector and its development are linked to more than 120 other sectors in the country as part of a genuine development process.

Government Real Estate Development Company

Al-Hogail later revealed that the Ministry plans to establish a development company and launch a mortgage fund to encourage banks to increase lending, and the ministry will also regulate development companies, though ultimate ownership of the product will remain with another government entity.

He added that the new development company will grant companies plots of land to build homes and help them secure financing by providing certain loan guarantees, and financial assistance will be expanded to include some homebuyers.

Strategic Tasks of the Ministry of Housing

For his part, Dr. Ahmed bin Abdullah Al-Shuaibi, Director General of the Institute of Public Administration, emphasized in his speech that among the tasks for which the Ministry was established are the development of the housing sector, the formulation of its future vision, and increasing the percentage of citizens who own homes, and housing issues have received special attention from our wise government under the leadership of the Custodian of the Two Holy Mosques, His Royal Highness the Crown Prince, and His Royal Highness the Deputy Crown Prince – may God protect them – noting that the housing sector is considered one of the most important contemporary social and economic sectors that has received growing attention in the Kingdom, through successive development plans in general, and the Tenth Development Plan in particular.

Appreciated efforts by the Ministry

Dr. Al-Shuaibi emphasized that one of the most significant outcomes of the state’s modern initiatives—may God protect it—which emerged early on, was the establishment of the Council of Economic and Development Affairs; which embodies the strong determination to address national development issues, including housing as a development challenge, and reflects the immediate implementation of the directives of the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud —may God preserve him—and his humanitarian spirit and tireless efforts to ensure that the citizens of the Kingdom enjoy development throughout our beloved homeland.

The Director General of the Institute of Public Administration stated: "The Ministry has spared no effort in this regard. The vision of the Ministry and the Minister of Housing has been comprehensive and not limited to the domestic level; as the Ministry of Housing has adopted strategies for partnerships with other countries that have successful and distinguished experiences in this regard, as well as attracting real estate developers; with the aim of providing the highest level of quality and available capabilities.

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• A working paper presented at the seminar revealed that the private sector contributed to financing approximately 75% of housing units during the development plans, and the paper presented by the Ministry of Economy stated that the number of housing units reached approximately 6.6 million by the end of the Ninth Development Plan, and that the Real Estate Fund contributed to the financing and construction of approximately (1,020,000) housing units since its establishment, while the number of subscribers to residential electricity service by the end of 2014 reached approximately six million units.

• Total demand: 1.46 million housing units

  The paper presented by Eng. Abdullah bin Abdulaziz Al-Jarbou, Deputy Minister for Human and Community Development, focused on addressing demand in the housing sector based on indicators of demand for housing units, with total demand estimated at approximately 1.46 million housing units for citizens and residents during the Tenth Development Plan, to meet the demand for new families (Saudi and non-Saudi). The paper also highlighted the most important issues and challenges related to demand, including the lack of data and research methodology in the housing sector, high development and construction costs, difficulty in obtaining real estate financing for projects, the complexity of current procedures and regulations, and shortcomings in the mechanisms for recovering loans provided by the Real Estate Development Fund.

  Supporting Supply Through Initiatives and Regulations

  Meanwhile, the third section of the working paper reviewed supply indicators for residential units, including those related to the Real Estate Development Fund’s contribution to financing the construction of residential units and the launch of numerous initiatives, most notably (accelerated loans, off-plan sales, and others), in addition to the Ministry of Housing’s contribution of 150,000 units on an urgent basis during 2016, and supporting supply by imposing land fees and utilizing unused government land and buildings.

  Recommendations and solutions on the table ISKAN

  The working paper put forward the following recommendations:

  Issuing the National Housing System and establishing the National Center for Housing Research and Data.

  Implementing mortgage and real estate financing systems.

  Adopting the National Housing Strategy and implementing its programs.

  Development of a land grant system.

  Establishing an urban planning system.

  Implementation and development of the Saudi Building Code for public and private housing projects.

  Developing the regulations for the co-ownership of residential units system.

  Accelerating the implementation of housing ownership databases.

  Encouraging cooperative, charitable, and savings-based housing, and issuing regulations governing them.