The shortfall of affordable homes in Saudi Arabia is well documented. Depending on the market report or piece of analysis, the kingdom needs as many as two million additional low and middle income homes by 2015. In order to meet demand, more than 163,000 homes are being planned every year until 2020.
Those homes will cost about $320bn over the next decade. Put simply, construction in Saudi Arabia means building homes.
At present, home-building makes up around 75 per cent of all construction in the kingdom and with per capita gross domestic product (GDP) less than $14,000, those homes need to be affordable. And, with the population of the kingdom’s capital inching closer to five million, the need for low-cost homes in Riyadh is particularly pressing.
All of these statistics are well-understood by Riyadh’s property developers. The problem, however, is that while the newest trend in real estate is affordability, developers seem reluctant to fully make the leap.
While investment in Riyadh’s real estate sector exceeded $43bn between 2005-2010, the incongruity between what is being said and what is being planned is disturbing. Much of what was offered at Riyadh’s annual property development and construction exhibition this year was still far too luxurious to meet the needs of the masses.
Several local developers that have recently completed luxurious projects are planning new ones. What is more, they are planning high-cost housing for provinces in every corner of the kingdom. Not only are developers building the wrong category of homes for the capital, but by spreading luxury projects to other provinces, they’re perpetuating Saudi Arabia’s most difficult challenge: meeting the housing demand.