A large number of real estate professionals have raised the issue of undeveloped ”white” land within neighborhoods. These “white” areas are fully serviced but have not been developed to meet individuals’ housing needs, even though they could meet housing demand for years to come, and logic dictates this because the state has spent millions of riyals to provide services to these plots in order to develop them and build residential units on them, rather than turning them into commodities to be bought and sold.
Businessmen and real estate developers have called for official intervention to curb real estate speculation after these plots became investment commodities, even for individuals, and some major real estate developers, noting that more than 45 percent of the land in the cities of Riyadh and Dammam consists of undeveloped space, and that this percentage could meet housing needs for the next ten years if it were developed for residential use, and that real estate speculators control these areas with the aim of driving up prices due to the absence of a strict regulatory framework that would facilitate the development of this land and break up the monopoly on it, since this land is ready for development in terms of infrastructure—including electricity, water, and telecommunications services, and paved roads, which facilitates the construction of residential units there, rather than searching for vacant land outside urban areas that requires infrastructure development taking many years to complete.
“Amlak” raised this issue with a number of leading real estate professionals, businesspeople, and those interested in the real estate sector, who revealed a great deal about this matter. Here is the text of the survey.
Speculation by Major Real Estate Developers
Mr. Abdulaziz Al-Sumaie, General Manager of Al-Sumaie & Al-Shatri Group (Riyadh), that the real estate market is affected by all external events that have local repercussions; however, the reality of the real estate market in the Kingdom may remain relatively stable in the face of these economic changes, which does not warrant a frenzied rise in land prices. He noted that the greatest danger lies in the continued internal real estate speculation by major developers, for which consumers may end up paying the price.
He explained that the lack of regulations or their ambiguity is one of the factors exacerbating the problem of residential land scarcity within cities, which has led to the expansion of residential developments beyond urban boundaries despite the presence of undeveloped land within the cities. He noted that the continued expansion of residential developments beyond city limits could come at a steep cost that strains the state budget, as such expansion requires significantly higher expenditures to provide these developments with integrated services outside city limits.
Vacant Land in the Heart of Neighborhoods
Dr. Khalid Al-Khathlan, an economist at the College of Business Administration at King Saud University, explained that more than 45 percent of the land in Riyadh consists of unused vacant land. He noted that this percentage could meet housing needs for the next ten years if developed for residential use, and that real estate speculators control these areas with the aim of driving up prices due to the absence of a strict regulatory framework that would help mobilize this land and break the monopoly that has persisted for many years. He emphasized that laws must be enforced and taxes—not zakat—must be imposed on the owners of these monopolized plots within cities, adding that it is unreasonable for urban sprawl to occur outside city limits while we have thousands of vacant lots within cities that are equipped with infrastructure; this is extremely surprising and does not happen in any other country.
Land Fees
Businessman Tariq Al-Tami called for the imposition of fees or zakat on vacant land within neighborhoods to break up monopolies and eliminate speculation. He also stressed the need to expedite the construction of the 500,000 housing units ordered by the King, may God preserve him, as this will help eliminate unregulated speculation. I also propose that anyone who purchases land be prohibited from selling it for at least one or two years from the date of purchase to curb speculation and prevent price hikes,It is also essential to prevent the trading of land and real estate among major real estate developers who hold sham auctions and sell land, properties, and residential units to one another at inflated prices agreed upon before the sham sale takes place—thereby misleading ordinary citizensthat land and real estate prices are rising—a despicable attempt on their part to fix certain prices and thereby impose them on the market. Unfortunately, the media promotes this,
Call for officials to intervene
Mohammed Al-Youssef, a businessman and real estate developer (from Dammam), called for the authorities to intervene to resolve the issue of vacant land within neighborhoods so that it can be utilized to address the housing crisis. He noted that while real estate prices would not decline if the monopoly on this land were broken, it would be possible to halt the expansion beyond urban boundaries in cities, which could cost the if it continues.
He noted that the phenomenon of rising prices in the real estate market is exaggerated, particularly in Riyadh, Jeddah, and Dammam, where prices in some residential neighborhoods have risen by as much as 400 percent over the course of six years in the Eastern Province, while in some neighborhoods of Riyadh they have reached 300 percent. He explained that in some cities, real estate prices are rising by 10 percent annually.
He called for the allocation of residential land to individuals, with housing applicants paying for development services through companies in which the state holds a 50 percent stake as a partner in this project, given the availability of land, and that a body be established to manage this project as an alternative to the Ministry of Housing’s initiative, which may not be suited to the needs of Saudis.
Purchases for Investment, Not Housing
Engineer Abdulrahman Al-Amin, Chairman of Rafahia International Real Estate Investment Company, criticized certain companies, businessmen, and speculators for purchasing vacant land within urban areas for the purpose of investment and price speculation rather than to develop it and convert it into residential units, noting that, as long as these lands are within the urban area, basic infrastructure and utilities such as electricity, water, and telecommunications services are available there.
He explained that real estate prices within the urban area have risen by 150 percent over the past four years. He noted that real estate price fluctuations are subject to supply and demand, and that demand for land as an investment is growing, which has driven up prices. Most real estate auctions are attended by investors—not only real estate professionals but also individuals—and purchases are made for investment purposes rather than for residential use, as real estate is considered one of the safest investments. He emphasized that this situation will not change unless there is official intervention.
More than 60% vacant lots within residential neighborhoods
Nasser bin Mohammed Al-Qahtani, General Manager of Dar Al-Aman Trading, explained that vacant land within the urban areas of Riyadh and Dammam accounts for more than 60 percent, This is a very serious issue in Riyadh and represents the most significant obstacle to investment: the landowners prefer to keep the land as an investment to profit from it and sell it only when prices rise, rather than developing it into residential units to help solve the housing crisis, This speculation has turned land into an investment commodity. He added that leaving vacant land within neighborhoods (urban areas) unused and failing to convert it into residential units is unacceptable, He emphasizes that the owners are looking out for their own interests rather than those of the nation and its citizens,Therefore, I believe the responsible authorities must take action to enact strict laws prohibiting speculation on vacant land within urban areas and requiring owners to develop it into residential units, because the state has spent millions of riyals to provide infrastructure within the urban area—for the benefit of citizens, not for the speculators who have caused the housing crisis and deprived citizens of their rights.
Failure to utilize these plots has driven up real estate prices
Architect Muhammad Numan of Madar Engineering Consultants expressed his deep surprise at the failure to utilize vacant land within urban areas, a situation that has driven up real estate prices. He said:“How can we say that the Ministry of Housing cannot find vacant land to implement the King’s decision to build 500,000 housing units when there are thousands of vacant plots within neighborhoods that have basic services, and at the same time, we are not making use of them, while speculators—the owners of these plots—are profiting from the existing infrastructure,” adding that the government of the Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz,may God preserve him, has developed the infrastructure within urban areas in order to utilize these plots for the construction of housing units on vacant land—not to provide a safe haven for their owners to hoard them until prices rise so they can profit millions from them—Therefore, they are the ones who benefit from the availability of infrastructure, as its presence increases the value of vacant land within neighborhoods.
