The auction for the Al-Nakhil project in Jeddah, which took place last Wednesday, sparked widespread controversy among real estate professionals and investors, as 99 lots were sold for a total of over 500 million (half a billion riyals), The auction was attended by more than 700 real estate professionals, investors, and financiers.
Buyers and investors
Prices for the 99 lots varied depending on location and features, ranging from 4,800 riyals per square meter for residential use to 8,100 riyals for commercial residential use, The development has garnered significant interest and growing demand due to its prime location in downtown Jeddah, in the heart of the Amair district, where most of the neighboring neighborhoods are home to middle-income residents. Sales were conducted in blocks, with the exception of a few individual plots.
It was noted that most of those who were able to purchase were investors, which leaves end consumers caught between high prices and a lack of financial capacity to buy. This, in turn, exacerbates the housing and residential land crisis, despite the imminent implementation of the "white land" decision.
The auction confirmed the resilience of the real estate market
Opinions among experts and stakeholders varied regarding the auction’s outcome. Engineer Abdulmoneim Mustafa Al-Shangiti, a member of the National Projects Committee at the Council of Chambers, considered the auction a strong indicator of the real estate sector’s resilience and the strength of the Saudi market, and that it reflected positively on the national economy. As for those fearful of a collapse or a significant downturn in the market and the impact of land fees, that is a separate issue; the measures being implemented are intended to regulate a reality that encompasses multiple segments, taking into account those seeking housing as well as the general publicin buying and selling real estate, as well as investors and real estate developers.
Auctions Are Deceptive
Abdullah bin Saad Al-Ahmari, Chairman of the Valuation Committee at the Jeddah Chamber of Commerce, stated that such auctions do not reflect the true reality of the real estate market, and many of them have been found to fail in the Eastern Province and Makkah. For me, the true benchmark is the buyer’s direct involvement and the transfer of the value of the sold land to the seller’s balance from the buyer’s balance. It is unreasonable that all these efforts to reduce land prices and bring them to a reasonable level have had no effect.
Reasonable prices given the property’s location
Real estate investor Abdullah bin Ibrahim Al-Subaie, however, believes that the prices achieved by the developer were fair and appropriate given the property’s proximity to the train station and the availability of all basic services, and that the sale reflects market conditions, as there are many prospective buyers who realized that the time was right to purchase. We must not forget that our current real estate prices are low compared to neighboring countries, and there will be no sharp decline unless there are significant and powerful factors, He noted that the auction as a whole sent a strong message about the security and safety enjoyed by the Kingdom and the strength of its economy.
