A number of real estate professionals in the Madinah region confirmed that the announcement of housing projects has not contributed to a decline in real estate market prices in Madinah; rather, it has led to a rise in prices amid growing demand for units and land in the city and the slow implementation of those projects.
Talal Safar Al-Omari, chairman of the Real Estate Committee and a member of the Valuation Committee at the Madinah Chamber of Commerce, said: “There is no indication that prices will fall due to the slow pace of implementation—which may take two to three years—and increased demand amid limited supply.” He added, “The impact of housing projects extends to land located far outside the Third Ring Road and to unregistered land without title deeds, whereas land located nearby and within the Third Ring Road is not affected due to low supply and high demand, as well as land expropriations for the expansion of the Haram and the development of informal settlements in the King Abdullah Project and themigration from other regions of the Kingdom to Madinah for the purposes of housing, settling down, and investment.
A number of businesspeople in the Medina region see the benefit of allocating large tracts of residential land in the city center and in development plans on all sides of the city to help those seeking housing achieve their goals, relieve them of the burden of paying rent, and at the same time reduceexorbitant rent figures and prices.
Experts point out that allocating and developing residential land will help curb rising land prices and apartment rents, which will in turn stimulate the construction, ready-mix concrete, and building materials markets, and open the door for smallto participate as subcontractors. However, delays in implementing these projects may not lead to any change whatsoever, as pointed out by many investors who have noted the slow pace of implementation and believe these projects will not alter the current market reality.
Ayed Al-Sanan, a real estate investor, said that the delay in housing projects to this point has had the opposite effect of driving up real estate prices, noting that even the infrastructure for the project that began in Madinah has not been completed—a sign —as he described it—that the housing projects will be ineffective in lowering prices in the future. Al-Sanani noted that the housing project in the Medina area had no impact on lowering real estate prices, and its effect was limited to a stagnation in the suburbs of cities such as “Al-Suwaidrah, Al-Mandsah, and, to some extent, Abyar Al-Mashi.” As for the public services, facilities, and the residential environment, the project had no impact on them; rather, land and real estate prices within residential areas are rising significantly, We have seen nothing but a continued rise in real estate prices and increased development of undeveloped land by investors, particularly for properties located within urban areas and service-rich zones, As for the suburbs and outlying areas, they have experienced a significant slump due to the halt in speculation there and the withdrawal of many who preferred to stop speculating and wait for new decisions to take effect, such as the Al-Awaina land grant plan, which is currently experiencing a slump and a decline in prices for reasons unrelated to housing—namely, the withdrawal of speculators and the fact that the project is not benefiting as expected from the expansion of the Madinah airport.
Al-Sanani believes that real estate prices in Madinah, even if housing projects are implemented and units are distributed, will not be affected for two reasons: delays in project implementation and the increasing number of people in need of housing, and the major expansion of the Prophet’s Mosque ordered by the Custodian of the Two Holy Mosques.
Sultan Muhammad, a real estate investor, said: Real estate prices in the Medina area have risen by 100 percent since Dhu al-Hijjah of last year in most developments, particularly in the eastern and southeastern parts of the city, noting that the housing project had no effect on lowering prices but rather led to a steady increase.
He added that in the districts east of the city —Al-Rabwah, Al-Suleimaniyah, and Al-Sarani—offer only a 10 percent chance of acquiring land due to limited supply. The same applies to the King Fahd development, where, as he noted, the market has become saturated, and some developments have been closed due to high demand and low supply.
Fahd Marzouq Al-Maghthawi—a real estate investor—stated: “The initial announcement of housing projects led to a lull in the market and a wait for implementation, but after delays and a prolonged wait, the real estate market returned to normal, and demand increased due to a lack of confidence in the ministry’s promises,” Al-Maghthawi said. “Demand exists, especially in areas within the Haram, where there is high demand, but supply is low due to the pending compensation for projects such as the train station, Darb al-Sunnah, and the expansion of the Prophet’s Mosque, as 14,000 properties will be expropriated to carry out these projects.”
Ahmed Al-Subhi, a real estate investor, said: “To date, no projects have been completed in Madinah except for the start of infrastructure work on the first project, which took a long time.” He noted that demand for residential units remains high among many citizens, especially since a large number of people wish to own property in the Madinah area there, whether as a permanent residence or a unit to serve as a base for annual visits. He added: “We have not seen any decline in prices; rather, they are rising. The increase may be less than in previous years, but it is a noticeable and clear trend in the real estate market.”
For his part, Saad Al-Shammari noted that he had been looking for a property three years ago but chose to wait after the announcement of the launch of housing projects, expecting real estate prices to fall within a year or two of the projects’ commencement. However, a property that was listed three years ago for half a million has now risen in price by 40 percent.
The land granted to citizens nearly two decades ago appears to be one of the means currently being used by investors to drive up prices for the end user, as interested parties in Madinah have called for the expropriation of vacant land and its purchase from the owners for housing purposes, as well as allowing for multi-story construction so that residential units under the Ministry of Housing take the form of multi-story buildings with various floor plans, starting with three-bedroom units for newlyweds. In cases where families have multiple children, the smaller apartment is reclaimed and prepared for small families of newlyweds, while families with multiple childrena larger apartment to accommodate the removal of more than 15 million square meters in the city—including more than 2 million square meters for the expansion of the Prophet’s Mosque—while emphasizing the necessity of imposing fees on vacant land.
Economists had called for the accelerated construction of housing units in the Medina area as soon as possible to mitigate the negative consequences of the housing crisis—ranging from rising land prices to a shortage of apartments and rent increases to around 45,000 riyals in some locations.
(Al-Iktisadiah)
