60% Saudis live in rented housing
The implementation of mortgage lending has led to massive expansion and a boom in home purchases
Rising land prices are a major factor in the housing crisis, accounting for 60% of the cost
Commercial mortgage lending does not exceed 1%, and the homeownership rate is 30%

Special — Amlak: Ahmed Al-Shimi
The British newspaper *Daily Star Sun* (DAILY STAR SUN) in a recently published report on the ongoing activity in the real estate market in the Kingdom of Saudi Arabia, noting that the Kingdom—the world’s largest oil exporter—needs to build 2 million housing units by 2014. Below, Amlak publishes the report.

Rental Housing
According to a survey conducted by CBRE, an international firm specializing in research and economic consulting, 60% of Saudis—or approximately 10 million citizens—live in rental housing, especially since rising land prices are preventing private real estate developers from building housing units at affordable prices. This comes at a time when the Kingdom is spending approximately 500 billion riyals on infrastructure and housing projects to meet growing demand.
However, the institution noted that rising oil prices and continued growth in the Saudi economy will lead to a significant recovery in the real estate market, in addition to the fact that the implementation of mortgage laws will lead to a major boom and a massive expansion in home purchases, particularly as it will provide more flexible and attractive financing options for citizens.
Mortgage Lending
Perhaps the most significant factor contributing to the housing problem in the Kingdom is the limited availability of commercial mortgage lending, which stands at no more than 1% in the Kingdom, compared to 6% in Kuwait, and 7% in the United Arab Emirates. This is compounded by high land prices and the underutilization of undeveloped land, especially since most Saudis have an average annual income of $27,000, whereas building a home in a modest neighborhood in the capital, Riyadh, requires $200,000 or more, with the land value accounting for at least 60% of the total construction cost.
Over the past ten years, the government has been conducting comprehensive studies on mortgage laws as one of the solutions to the growing housing problem, but the delay in implementing mortgage mechanisms is harming the entire real estate sector.
When comparing Saudi Arabia to other countries in terms of homeownership rates, we find that its average annual growth rate is 30%, which is lower than the global average of 70% per year, while the rate in Brazil is 75%, in Turkey 70%, in Singapore 90%, and in Nigeria 25%.
Mortgages
Analysts expect mortgage regulations to lead to a significant boom in the low- and medium-cost housing market, especially since they establish specific rules for lending and borrowing, especially since these regulations have the potential to generate revenue and allow Saudi banks to diversify their portfolios, thereby creating additional opportunities for investment in the construction sector and related economic sectors.
Demand for housing is concentrated in three main regions of the Kingdom: Makkah, Riyadh, and the Eastern Province. These three regions are home to approximately 66% of the Kingdom’s population, and the number of homes there accounts for 67% of the total housing stock.
Estimates indicate that the Kingdom’s population is expected to reach 37 million by 2020, and that the housing stock will reach 7.080 million units in the same year, resulting in a ratio of 5.28 people per housing unit, which means that approximately 2.4 million units will need to be built over the next ten years, with annual demand rising from 200,000 units last year to 264,000 units in 20120.
Real Estate Sector Growth
The public and private sectors are also expected to contribute massive investments that will help the real estate sector grow, with average annual spending reaching 130 billion riyals.
There is no doubt that the Saudi housing market suffers from a clear imbalance between supply and demand; providing the necessary financing options for home purchases will alleviate demand, and thus restore balance to the real estate market, which suffers from a shortage of low-cost housing units.
The newspaper concludes its report by stating that: The real estate market in Saudi Arabia is considered one of the most promising and investment-friendly sectors compared to other GCC countries, especially given the massive government spending in this sector, which amounts to 13% annually, the significant expansion in residential construction, increasing residential growth, and rising demand for housing from citizens and residents.