Badr bin Saud: Housing is rolling down

Elaph newspaper published a new article by Saudi writer Badr bin Saud, entitled “Housing is Rolling Down,” in which he talked about the future of investment.

The article stated: “Requests to carry out the eviction of real estate from tenants, specifically those registered on the Ejar platform in 2023, reached about 33,300 eviction requests, an increase of 3% over the numbers of 2022, and between January and March of this year, their numbers exceeded nine thousand requests.” At a rate of 109 requests per day, in both cases the city of Riyadh topped the list with a percentage of 37% for the first and 39% for the second, which indicates that it may reach unprecedented numbers at the end of the year, and the rental platform, since the beginning of its work in 2018, has introduced amendments to it that restricted the landlord’s encroachment on the property. The tenant, but she is still deficient, and for example, she does not enable the tenant whose services have been suspended to obtain financing to pay the amounts owed by him, by guaranteeing a portion of the undeducted funds.

No one assumes that the Saudis, in major cities, will reach the stage of living in shipping containers, as happened in the American city of San Francisco, which is considered the highest rent among American cities, unless things continue as they are, and with regard to the Saudi capital, the Expo 2030 and the World Cup World 2034, and the projects that will be worked on to host the two events, will inevitably lead to an increase in rents, and the most appropriate solution to confront this problem, in my belief, appears to be in adopting the rent-to-own model, within the package of real estate products, so that the person pays 20% of the value of the property as a down payment. The monthly rent is an installment with a reasonable interest. This method is used in Europe and America, and people there only own homes in this way.

The Saudi Ministry of Justice explained in 2022 that the numbers of defaulters on real estate loans reached more than 77 thousand defaulters, and these are the ones who take financing to own their own homes, indicating that there is a common suffering among tenants and those who want to own their homes, and the pricing for rent is per unit. Residential, and the price per meter is not taken into account except when purchasing, and it is a real estate custom and not a Saudi law or legislation, and the rental meter is only approved in showrooms, offices, and commercial stores, and the above indicates that the objectives of the Ministry of Municipal Affairs are not progressing as they should, and it does not view the real estate as influential. Directly in people’s lives, and in family and financial stability, it does not care about its central role in the Saudi economy, and that its participation in the non-oil domestic product reached 12.2%, in addition to its connection to more than 120 economic industries at the national level.

In the past five years, more than 15 real estate legislations were issued, and the real estate sector was restructured in a way that enhances transparency and reliability, despite the contribution of banks and financial institutions in housing support and financing, amounting to 650 billion riyals, or the equivalent of 174 billion dollars, and the increase in state-backed contracts to about 750 billion riyals. A thousand decades, but the confused conditions are still in place, unless we say that they are in a downward spiral, and the evidence is the stalled projects and the statistics of payment defaults and evictions, and certainly no one discusses the necessity of economic development, not to increase wealth, but to maintain the current conditions, and in a way that accommodates The expected population growth rate and its needs.

The Ministry of Municipal Affairs, according to its official statements, said that the Saudi housing program will provide one million housing units in 2030, and that during the period between 2018 and 2023, approximately 450 thousand residential units and lands were offered, and what is true in the case of residential land is that the Ministry actually gives it to citizens, But it takes it back unless it is built upon within three years, without paying attention to their circumstances and living conditions. Real estate people in the Kingdom believe that the interest rate and its rise may affect many real estate projects in 2025, and will raise the cost to buyers and reduce real estate demand rates. Among the indicators are Currently, 34% of the Kingdom’s population resides in apartments, and by the way, the issue of insufficient salary at the end of the month is a global phenomenon, and does not concern Saudis or Arabs. Alone, an American study conducted in 2017 found that 78% of Americans have a similar problem.

The future of investment in real estate is not guaranteed, and the talk does not concern the Kingdom alone, but rather includes the entire world, and one of the evidence is what happened to the company (Blackstone) in 2023, and the company is considered the largest in the world in the field of alternative asset management, such as real estate investments and retirement funds, as investors in its real estate By requesting the withdrawal of five billion dollars, the amount represents 7% of its entire assets, and perhaps the two campaigns of the Jood Housing platform, in the current and previous years, reveal the interest of the Saudi leadership in this sensitive issue, and in providing free assistance to the families most in need of housing, and the evidence is its support for the current Jood campaign, with its value 150 million riyals or 40 million dollars.”