The news that Saudi Arabia’s Housing Ministry has tendered the first large package of its programme to build 500,000 homes for local people is good news for Saudi nationals and the region’s construction sector.

It is estimated that Saudi Arabia will face a shortfall of 1.65 million homes by 2015, and, in the region’s current political climate, Riyadh is aware of the need to provide adequate housing for its people.

On the back of the uprisings and overthrow of rulers in Tunisia and Egypt, King Abdullah pledged to spend $67bn on building new homes in March last year. The news was not only well received by the local population, but also by contractors. In contrast to the Dubai real estate boom, which was fuelled by speculative developments for expatriates, the real demand for homes for local people in Saudi Arabia will ensure planned projects reach execution.

What has disappointed contractors is the slow progress regarding the development programme. Riyadh formed the Housing Ministry on the back of King Abdullah’s investment pledge in March last year, and it has taken 17 months for the first large construction package to be tendered. A handful of small packages, of 1,000 villas or less have been tendered, but the contract to build 7,000 villas in Riyadh is the first sizeable package. For the government to deliver the 500,000 homes it has pledged, it will need to pick up the pace of tendering and awarding construction contracts.

Contractors hope that the tender of the first major package signals the beginning of Saudi Arabia’s housing boom.