M. Hamid bin Hamri: It Is the Competition for Real Estate That Drives Up Prices

Omar Al-Kindi: Everything in the real estate sector has become clear and transparent to everyone, under government oversight

Hassan Al-Amoudi: The rental index serves as a reference for landlords in evaluating properties... and will serve as an alternative to appraisers

Khalid Al-Duwayan: The new platforms will increase transparency and improve the real estate environment for landlords, tenants, and buyers

Anas Al-Rashoud: There’s nothing better than comparing with something realistic, proven, and from a reliable source

The Ministry of Municipal, Rural Affairs, and Housing recently launched the Rental Index in both its residential and commercial components in its first phase, covering six major cities, to display rental transactions and average rental prices. This will provide insight into market trends and rental values across cities and neighborhoods, thereby ensuring the transparency and reliability needed to make informed decisions.

The newspaper “Amlak Real Estate” surveyed a number of stakeholders in the real estate sector regarding the index’s impact on the rental market, yielding the following results:

Bin Hamri: No Impact on the Market or Prices

First, Engineer Hamid Bin Hamri, Chairman of the Real Estate and Urban Development Committee at the Eastern Province Chamber of Commerce and Industry and Chairman of Tamkeen Real Estate Investment and Development Company, spoke, denying that the rental index has any impact on the market or prices, It is merely a way to gauge prices in specific locations—provided the indices are based on sound foundations and the information they contain is accurate and official.

Bin Hamri emphasized that the index serves to disclose prices to the end user so that they have a general idea; it will not be influenced by high prices, and no one will be able to impose specific prices on them in specific locations, Therefore, the index will help them make informed decisions regarding rent.

Bin Hamri clarified that the indices are not intended as a tool for appraisal, emphasizing that appraisal has its own foundations, institutions, offices, and professional appraisers under the umbrella of the Saudi Appraisers Authority, so it has no role in this matter; the sole authority here is the appraisers accredited by the Saudi Appraisers Authority.

Bin Hamri concluded his remarks to “Al-Amlak” by stating that the market is not transparent to everyone, but it is clear; however, competition in demand for real estate—whether for rent, ownership, land purchase, or leasing—drives up prices when demand exceeds supply, as this is the natural law of the market.

Al-Kindi: Revealing the Real Prices

For his part, Omar Hadi Al-Kindi, an expert on real estate matters, explained that efforts to foster coordination and integration among ministries are almost universally recognized, and the result of this collaboration is the emergence of such complementary initiatives, emphasizing that the goal of these initiatives—including the rental index—is transparency, price stability, and a balanced supply and demand.

Regarding the index’s impact on revealing actual prices, Al-Kindi stated that the impact will be positive and satisfactory to both contracting parties (landlord and tenant) in determining fair rental value, in addition to serving as an accredited platform that complements the work of real estate appraisers and real estate brokerage firms, noting that such platforms cannot under any circumstances serve as a substitute for them. Al-Kanadi affirmed that the rental index could serve as a key reference for landlords and industry stakeholders, adding, "We will soon see its positive impact on the real estate sector."

Al-Kanadi emphasized the importance of launching the real estate exchange and the rental index, describing them as two essential, mutually complementary factors for increasing transparency in a sector where everything is now clear and open to everyone, Under government oversight, we hope it will continue to develop at the same pace to keep up with all new developments that serve this sector.

Al-Amoudi: The Proper Way to Manage Real Estate

In turn, Hassan Mohammed Al-Amoudi, a real estate expert, stated that the rental index affects price transparency, noting that this strengthens the role of real estate brokerage firms; as it gives them the opportunity to determine prices without the hassle of appraisal or valuation. Therefore, transparency will prevail among market participants in this sector, and the same effect applies to the real estate exchange.

Conversely, Al-Amoudi emphasized that real estate indices are extremely important for property owners; they serve as a compass that guides them in determining the upward and downward trends of the properties they own, and guide them on how to manage their properties to generate reasonable profits, without fear of fraud or deception, which in turn leads to reasonable stability in rental prices. This rental index serves as a reference for landlords in valuing their properties, as it relieves them of the burden of finding tenants.

Al-Duwayan: Ease of Convincing Clients

For his part, Khalid bin Ali Al-Duwayan, Chairman of the Board of Directors of Al-Duwayan Holding Company, that increasing transparency by publishing these indices will enhance quality and contribute to achieving a balance between supply and demand, as well as establishing reasonable and logical values and prices for real estate products, whether for sale or rent.

Al-Duwayan explained that disclosing prices for each area in the rental index will significantly impact how easily real estate agents can convince clients and how quickly they can provide service, emphasizing that the role of real estate brokerage firms will not end or cease, noting his conviction that the broker’s role will be advisory, helping clients make sound choices and facilitating better communication with landlords.

Al-Duwayan emphasized that the launch of the rental index will help landlords determine the appropriate value of their properties, keep pace with market improvements, and maintain and develop their properties, as outstanding properties will be readily apparent and require little research, and landlords and those seeking rentals can easily compare properties similar to their own.

Al-Duwaiyan concluded his remarks "to Amlak newspaper" that the platforms recently launched by the Ministry of Justice will greatly contribute to information disclosure and transparency, which will help improve the real estate environment for owners, tenants, and buyers, and will make the market transparent to everyone.

Al-Rashoud: Improving the Pricing Method

Engineer Anas bin Adel bin Abdulaziz Al-Rashoud, CEO of Awan Real Estate, emphasized that the rental index will help improve pricing practices in the real estate market in general, and will have a positive impact on the market by stabilizing prices. Al-Rashoud added that it will support real estate brokerage firms; as prices are now transparent, which will make it easier for these agencies to convince property owners, on the one hand, not to overestimate rental values, and clients, on the other hand, of the reasonableness of the offered prices.

Al-Rashoud noted that the rental index will serve as a benchmark for landlords to evaluate their properties and compare them with similar ones, noting that there is nothing better than a comparison based on factual, verified data from a reliable source. He emphasized that such indices, in addition to the real estate exchange, will reduce risks in a market that has become clear and transparent.