Saudi housing crisis deepens

16 May 2013

The decision to hand over land to the private sector is likely to further delay Riyadh’s ambitious $70bn housing programme

The news that Saudi Arabia’s Housing Ministry is expected to hand over the responsibility to the private sector for building homes for the first phase of its ambitious $70bn housing programme is the latest sign that Riyadh is unable to deliver on its housing pledges.

King Abdullah announced the scheme to build 500,000 homes for local people in March 2011. The ambitious plan was part of a number of official initiatives to improve social welfare, and was launched at a time when social issues were at the roots of uprisings in other Arab states.

The initial announcements were welcomed throughout the kingdom, with many Saudi Arabians unable to buy their own homes and living in poor conditions. However, more than two years later, minimal progress has been made. The ministry’s decision to cancel some of the first major deals and hand over the task of building the houses to developers and individuals suggests the task of delivering such an ambitious scheme has proved too difficult. 

The delays are evidence that inefficiencies in the kingdom’s economy can slow development

A number of factors have been attributed to the lack of progress with the programme including difficulties obtaining land, overloading of ministry departments and changes in government personnel over the past year. The delays are evidence that inefficiencies and bureaucracy in the kingdom’s economy can slow development, despite its vast oil wealth.

The decision to hand over land to the private sector is set to further delay the scheme, with the processes for administering plots of land and loans often slow and ineffective. Much of the land previously assigned for housing is underdeveloped as a result of citizens being unable to afford to build on their land.

After two years of no progress and no clear strategy for how the ministry is to proceed with the housing scheme, Riyadh will need to start making decisions quickly before the housing shortage becomes a chronic problem.

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