Experts and specialists attribute the rise in real estate prices in major cities to significant population migration from villages to major cities, coupled with a shortage of land suitable for construction, which has led to high demand and low supply, and consequently higher prices.
Abdullah Al-Ahmari, chairman of the Real Estate Committee at the Jeddah Chamber of Commerce, says: “It is natural for real estate prices in major cities such as Jeddah, Riyadh, Mecca, and Medina to be higher than in other cities across the remaining provinces, as they provide all the basic services necessary for life—such as education, healthcare, and all other essential services related to citizens’ daily lives—along with job opportunities. This has contributed to a reverse migration from villages and medium-sized cities to these major cities, and consequently, a larger population in the major cities, which has led to increased demand for real estate in the major cities and decreased demand in smaller cities, He added that all services must be available in both cities and villages, regardless of their size or population, as the presence of comprehensive services—such as hospitals, universities, and commercial centers— will help foster economic activity in these cities and villages and thereby promote their development, which will in turn have a positive impact on major cities whose infrastructure is under significant strain from continuous migration. He expressed the hope that public transportation routes would be established to connect villages near major cities, thereby reducing the need for their residents to migrate there.
Al-Ahmari added that once residential units in a housing project are delivered in the month of Dhu al-Hijjah and the decision to collect zakat on undeveloped land begins to be implemented, real estate prices will return to their natural levels and become affordable for citizens, Economist Fadl Abu Anayin, however, believes that the main reason for rising real estate prices in major cities is the lack of balanced economic development between major cities, smaller cities, and villages. This leads to a massive exodus to major cities; for example, a city like Riyadh is home to approximately5 million people, even though it lacks many basic resources such as an abundant water supply and energy, as water and energy are transported there from other cities on the coast. This indicates a flaw in the development plan, as each city could have been developed by supporting its industry or unique characteristics—such asfishing for coastal cities and livestock farming for desert cities. This would have halted the migration that has put pressure on major cities, thereby increasing demand and driving up prices—especially real estate prices, given the original scarcity of land suitable for development and construction. Abu Einain added: The real solution to this problem is to develop villages and flood the real estate market in major cities with land that has good infrastructure. At that point, I expect real estate prices in major cities to fall, and it will even become easier for citizens to acquire, build on, or develop such land.