The Gulf property sector competition is ready to heat up as the region’s largest economy, Saudi Arabia, is gearing up to open its property market for foreign investors, including its religious cities, Makkah and Madinah.
The property market pundits say that the opening of the Saudi market will not only provide another stable and attractive avenue for foreign investors like the UAE but will also be an opportunity for global and regional developers to expand their portfolio to the region, where the return in investment is much higher than many other major countries which have reached the maturity level.
Moreover, the regional residential property market is already facing a shortage of homes, which will also attract more investment and raise prices. As per the Statista, guided by Saudi Arabia, the GCC countries will lack around 6 million housing units by 2022.
Currently, the UAE, the pioneer in introducing freehold property in the Gulf, leads the region regarding the offerings of freehold properties. Besides, Dubai allows people of any ethnicity to buy property in around three dozen areas. Similarly, different locations in Abu Dhabi, Sharjah, and other northern emirates also offer freehold properties. As per the UAE Central Bank, Real estate is the sixth most vital non-hydrocarbon sector accounting for 8.2 percent of non-oil GDP.
In addition, Bahrain has 10 areas, while Qatar offers 10 localities where foreigners can buy property. Neighbouring Osman also allows foreigners to purchase property on specific projects in the Sultanate.
Recently, Abdullah Alhammad, CEO of Saudi Arabia’s Real Estate General Authority ( Rega), said that work is in the final stages to allow Saudis to own property in all parts of the kingdom. While he admitted that property prices in the kingdom are high due to the gap between supply and demand, adding that the new law will be published soon.
The real sector accounts for around 5.1 percent of the kingdom’s GDP and 12.8 percent of the non-oil GDP.
He added that foreigners could buy various properties, including commercial, residential, and agriculture.
Moreover, the Saudi government imposed a 2.5 percent tax on undeveloped land bought by landowners in urban areas to increase construction activity in the country and build more homes.
Industry executives say that Makkah and Madinah will see strong interest from Muslims worldwide. At the same time, other tourist-focused cities like Neom, the Red Sea Project, and Qiddiya will attract more international buyers.
As a result, with the beginning of the property sector by Gulf countries, the contributions of the real estate market to the region’s overall economy will increase and help the regional government diversify away from oil income.
Pundits say that the benefits of freehold laws will not be restricted to commercial and residential properties but also expedite the development of affiliate sectors like hotels and theme parks.
