Prices have been falling across the board, affecting everything from real estate to food, cars, and clothing—and especially land prices and various types of real estate (villas, apartments, commercial offices), whether for sale or rent. There are no longer any acceptable excuses for property owners to offer tenants or buyers, such as (inherited property, rights of orphans), which some have continued to use as a major obstacle to hide behind as an excuse for not responding to the wave of price cuts. However, there is no escaping the need to respond to recent economic and financial developments, which began roughly two years ago, starting with the drop in oil prices in mid-2014. This was followed by a real estate slump and a significant decline in prices, whether for residential unit sales or rentals. For the first time, we are seeing attractive offers from residential unit owners, most notably "Buy a villa and get a car for free."
The drop in oil prices was followed by a decline in local liquidity, which affected inflated market prices, particularly in the real estate sector,The latest statistics indicate that the decline in undeveloped land prices ranged from 20% to 35%, particularly for residential land, In the same context, the statistics also indicated a decline in residential villa prices of about 30 percent, a drop that some view as reasonable given the fantastical, exaggerated inflation of prices over the past five years.
As for rental prices, a quick look at the law of supply and demand (namely, that as supply increases, prices decrease, and as supply decreases, prices increase) reveals that the supply of residential and commercial units exceeds demand, not because of a surplus in the total number of units and offices, but because tenants—especially in the commercial sector—are reluctant to take the risk of leasing commercial units as prices continue to fall; we have seen a decline in commercial rents of more than 50 percent. In the residential sector, for the first time, we are seeing entire buildings in some well-known Riyadh neighborhoods—such as Al-Mursalat, King Fahd District, Al-Malaz, and others), entire buildings are being offered for rent because tenants have vacated them to search for residential units at lower prices. In response, some landlords have rushed to reduce prices by varying degrees, though some of them still cling to the old, high prices, so their residential units have remained empty for months, with crows cawing in them today and spiders weaving their webs, and birds making their nests there.
It is necessary to offer some real estate advice for the sake of God: some of the stubborn property owners must accept the current situation, come down from their ivory towers, and accept the reality of lowering property prices and rents. A wave of price declines has begun to affect everything due to major economic changes for several reasons, including the reduction in government employees’ salaries following the cancellation of a number of allowances and benefits, and prior to that, the drop in oil prices, which was followed by a wave of declines. So how long will some real estate agents cling to their exorbitant prices that are no longer in line with the times?
