The regulations on fees for undeveloped land have cast a long shadow over the real estate development sector, which will be the only way to prevent the application of fees on undeveloped (raw) land covered by the first phase—areas exceeding 10,000 meters.
Experts and specialists believe that the real estate development sector is facing a critical phase and a major challenge, as it is the only sector capable of converting undeveloped land into developed properties—especially since large tracts of this land are owned by individuals, who are mostly merchants or well-known figures. Most of them are unable to develop the land themselves due to a lack of experience on the one hand, and the need to understand market requirements and the current stage of development on the other—aspects that only experienced developers can fully grasp.
Abdulrahman Al-Muheidib, a specialist in the real estate development sector, expressed great optimism that the era of undeveloped land in the cities of Riyadh, Jeddah, and Dammam is coming to an end, noting that the implementation of the first phase of fees will help break the monopoly. He said: “I believe the fees will push real estate development companies to significantly change their business strategy, so that their primary goal is to provide land suitable for construction and then offer it for sale, enabling everyone—whether citizens or companies—to purchase it, and these citizens will be more eager to invest in the land by building on it, rather than hoarding it as was the case in the past.”
The Real Estate Index recorded a rise in liquidity last Sha’ban to 28.3 billion riyals (18 billion riyals for residential and 10.3 billion for commercial), which is higher than last Rajab (22.3 billion riyals, of which 14 billion riyals were residential and 8.5 billion riyals were commercial) by 25 percent, and 20 percent lower than Sha’ban of last year, compared to the same month last year (34.4 billion riyals, of which 22 billion riyals were residential and 12.4 billion riyals were commercial).
He added, “Although the market has been quiet during the blessed month of Ramadan, this lull is seeing a number of agreements and initiatives that promote land transactions and prevent subsequent monopolization.“ He said: ”Everyone today is keen to avoid paying fees on undeveloped land, whether they are individual owners or large real estate companies—some of which have been in the habit of hoarding land and thereby controlling the market. and these companies will find themselves forced to pay millions of riyals annually if they continue to hold onto the land without investing in it."
Al-Muheidib believes that “the future of real estate development in Riyadh is very reassuring and promising.” He said: “There are large, reputable companies preparing to redefine their goals and rearrange their priorities in accordance with the new real estate regulations and legislation, foremost among which are land fees.” He added: "I believe that landowners will try to avoid paying the land fees, which will be relatively high, by doing one of two things: either selling the land before a year has passed, or investing in it by building on it."
Regarding his analysis of the Riyadh market, Aban Al-Muheidib noted that it is one of the regions with the highest demand for undeveloped land, especially in vital areas suitable for major investment projects as well as luxury housing developments, which is why I am certain that there will be extremely active real estate activity in the region, most notably the widespread trading of undeveloped land, followed by a revival of construction activity in the region."
