As non-essential projects look increasingly unlikely to press ahead in Saudi Arabia amid reduced government spending, contractors and consultants have begun looking to the housing sector for opportunities as Riyadh starts to make progress on narrowing its affordable housing gap.
Saudi Arabias Vision 2030 set the foundations for how the kingdom is going to transform its economy and in the following National Transformation Plan (NTP), the Housing Ministry said it is planning to spend up to SR59.2bn ($15.8bn) on housing over the next five years to ease the shortage of affordable homes.
The announcement came as little surprise, with several developments in recent months indicating that housing remains a priority for Riyadh.
In recent months, the kingdom has taken steps to tax unused land, and some developers have responded by pressing ahead with new schemes. The Housing Ministry has also announced it is offering local developers partnership packages to build projects across the country.
Riyadh will also be looking at alternative ways to fund the delivery of the promised 300,000 units over the next few years.
Similar to neighbouring Bahrain as well as Egypt, which have both invited local and international private developers to build affordable housing, the Saudi authorities have already started looking towards the private sector, both locally and internationally, to help meet the targets.
In the past, private developers in the kingdom have had limited interest in low-end housing, but with demand so strong and growing, Riyadh should be able to offer developers suffcient incentives to entice them to help fulfil its targets.