”Amlak” raised this issue to a number of senior real estate professionals, businessmen and those interested in real estate affairs, who revealed a lot about this issue, so here is the text of the survey.
Speculation by senior real estate professionals
M.Abdulaziz Al-Sumaiy, General Manager of Al-Sumaiy and Al-Shitari Group (Riyadh), explained that the real estate market is affected by all external events that are reflected locally, but the reality of the real estate market in the Kingdom may experience a kind of stability in the face of these economic changes that do not require crazy price increases in the lands. He pointed out that the greatest danger lies in the continuation of real estate speculation internally by large real estate developers, which may pay the tax of the consumer.
He pointed out that the lack of controls or lack of clarity is one of the reasons that increase the scarcity of residential land within cities, which called for the extension of residential plans outside the urban area despite the existence of unutilized areas of land within cities. He pointed out that the continued extension of residential plans outside the city limits may be costly for the state budget, as its extension requires multiples of expenses to cover these plans with integrated services outside the city limits.
Vacant land in the middle 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 is unused space. He pointed out that this percentage can cover the housing need for the next ten years if it is invested in housing, and that real estate speculators control these areas with the aim of raising their prices in the absence of a strict system that contributes to moving these lands and breaking their monopoly that has extended for many years. He noted that it is necessary to activate the laws and impose the tax and not the zakat on the owners of these monopolized plans inside the cities, adding that it is not reasonable that there is urban sprawl outside the cities while we have thousands of vacant lands inside the cities and have infrastructure, this is very surprising and does not happen in any other country.
Fees on land
Businessman Tariq Al-Tami called for imposing fees or zakat on white lands within neighborhoods to break the monopoly and eliminate speculation, and also must accelerate the implementation of the 500 thousand units ordered by the King, because this helps to eliminate random speculation, and I also suggest that those who buy land are not allowed to sell it after one or two years from the date of purchase to eliminate speculation and raise prices, and it is also necessary to prevent land and real estate trading between large real estate agents who hold fake auctions and sell land, real estate and housing units between each other at high prices agreed upon before the contract to conduct the sale process.
Demanding the intervention of officials
Mohammed Al-Yousef, a businessman and real estate (from Dammam), called for the intervention of the responsible authorities to solve the issue of vacant lands within the neighborhoods so that they can be used to solve the housing crisis. He pointed out that if these lands are monopolized, real estate prices will not decline, but the creep outside the urban area in cities can be stopped, which may cost the country's economy if it continues.
He pointed out that the phenomenon of rising prices in the real estate market is exaggerated, especially in Riyadh, Jeddah and Dammam, which in some of its residential neighborhoods reaches 400 percent within six years in Al-Sharqiya, while in some neighborhoods of Riyadh it reached 300 percent. He explained that some cities have real estate prices rising by 10 percent annually.
He appealed that individuals should be given residential lands in exchange for housing seekers paying the value of services to develop them through companies in which the state owns 50 percent of them as a partner to establish this project in light of the availability of quantities of land, and that there should be a body responsible for managing this project as an alternative to the Ministry of Housing project, which may not suit the nature of its nature and the needs of Saudis.
Buying for investment, not housing
Engineer Abdulrahman Al-Amin, President of Rafahia International Real Estate Investment Company, criticized that some companies, businessmen and speculators buy vacant lands within the urban area with the aim of investment and speculation in their prices and not in order to develop them and convert them into residential units, knowing that these lands as long as they are within the urban area, the infrastructure and services of electricity, water and communication services are available in them.
He explained that the real estate market within the urban area has increased its prices within four years by 150 percent. He pointed out that the fluctuation of real estate prices is subject to the process of supply and demand, and the growing demand for land as an investment, which was a reason for raising prices, as most real estate auctions are attended by investors not only from real estate, but even individuals, and purchases with the aim of investment and not housing, as real estate is one of the safest investments. He emphasized that this will not change unless official action is taken.
More than 60% space within neighborhoods
Nasser bin Mohammed Al-Qahtani, General Manager of Dar Al-Aman Trading, explained that the vacant areas of land located within the urban area in the metropolitan areas of Riyadh and Dammam reach more than 60 percent, and this is a very dangerous Riyadh matter and represents the most prominent obstacles to its investment are its owners who prefer to keep it as an investment to benefit from it and only sell it when its prices rise, instead of building it and converting it into housing units, to contribute to solving the housing crisis, and this speculation turns land into investment goods as an investment, adding that keeping vacant lands within the neighborhoods (urban area) without benefiting from it is a safe investment. Neighborhoods (urban area) without taking advantage of them and converting them into housing units is unacceptable, and confirms that their owners are looking for their interest and not the interest of the country and the citizen, so I see that the responsible authorities move to set strict laws that prevent speculation in vacant lands within the urban area, and oblige their owners to exploit them and convert them into housing units, because the state has spent and provided infrastructure in the urban area with millions of riyals, for the citizen and not for speculators who caused the housing crisis and denied citizens from obtaining their rights.
Failure to exploit them increased real estate prices
Architect Mohammed Noman - Madar Engineering Consultants expressed his great surprise at the lack of exploitation of vacant lands within the urban area, which increased real estate prices, and said: "How can we say that there is a Ministry of Housing does not find vacant lands to implement the King's decision to build 500 thousand housing units while there are thousands of vacant lands within neighborhoods where basic services are available, and at the same time, we do not benefit from them, while speculators benefit from the owners of these lands, who benefit from the availability of infrastructure, adding that the government of the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz, may God protect him, has equipped the infrastructure within the urban area.
