The news that Saudi Arabia’s Housing Ministry is moving forward with plans to build large housing projects throughout the kingdom is encouraging news for Saudi nationals and also contractors looking to win work. However, progress with the schemes is being met with cautious optimism.

By the end of February, the Housing Ministry is expected to have three more packages for schemes in Jeddah and Kharj, in addition to the larger package that was tendered in Riyadh towards the end of 2012.

But although the new housing projects will be welcomed, Riyadh needs to do a lot more to avert a serious housing shortage. While packages totalling more than 15,000 villas have been tendered or are expected imminently, this falls short of the 500,000 new homes that King Abdullah bin Abdulaziz al-Saud pledged in March 2011. It is estimated that Riyadh will require more than 1.5 million new homes by 2015, and at the current rate of delivery the country will have a major shortfall.

To assist in delivering the new homes for local people, Riyadh created the new Housing Ministry and appointed US-based Parsons International in late 2011 to manage the first phase of the programme, which accounts for about 135,000 houses. By the beginning of 2013, the largest package to have been tendered by the ministry was 7,000 villas, with few other contracts having been released to the market.

With oil prices set to remain high over the next 12 months, Riyadh must take advantage and ensure that 2013 is the year its starts to deliver on its housing programme. If not, Saudi Arabia’s looming housing crisis will turn into a chronic problem.