Efforts ongoing to boost home ownership rates in Saudi Arabia

With population growth of 2.4% in 2015, there is a rising need for housing in Saudi Arabia, and the government has introduced measures to create half a million affordable units for its citizens, only 30% of whom currently own their own homes. The latest initiative is a 2.5% tax on undeveloped land, which was introduced on June 15, 2016.


In 2011 the late King Abdullah bin Abdulaziz Al Saud called for the construction of 500,000 affordable properties for citizens, and in 2014 the Ministry of Housing created a scheme called Eskan, which was designed to increase the proportion of home ownership, encourage private sector involvement in developments and provide good-quality, affordable homes for Saudi nationals. The scheme is only open to Saudi citizens who do not yet own a home and offers them subsidised home loans or subsidised land sales for a 10-year period. Two major projects are being constructed by Eskan – a SR1bn ($266.6m) development 5 km from Riyadh’s King Khalid International Airport, with 3000 residential units, 76% of which will be plots for individual villas; and the Salman Bay development 45 km north of Jeddah, which will have 25,000 residential apartments in 1250 buildings.

However, according to property consultancy JLL, most of the 20,000 new homes built in Jeddah in 2015 were part of small developments, as were the majority of the 17,000 new units constructed in Riyadh.


In November 2014 a new mortgage law was passed with a revised loan-to-value ratio limit of 70%, requiring anyone purchasing a home to pay a 30% deposit. The law was designed to prevent a housing bubble from forming but proved a major stumbling block for middle-income families hoping to buy properties in the country’s costly major cities. According to Ministry of Justice figures cited by JLL, the new law led to a 59% decline in villa transactions and a 27% drop in apartment sales. However, in March 2016 the Saudi Arabian Monetary Agency announced it was easing the loan-to-value ceiling to 85% for finance companies specialising in home financing.

Land Tax

The investment habits of landowners in the major cities of Riyadh and Jeddah are also seen as impediments to the availability of new homes. A new law has been passed that will levy a 2.5% tax on undeveloped plots, known as white or idle land. Many landowners have held onto parcels of land for speculative purposes, and it is hoped that the levy will encourage them to develop these sites. The tax collected from those who choose to leave sites undeveloped will be used to build affordable homes.

Major Contracts

According to National Commercial Bank, government departments and state-owned companies commissioned several multi-billion-riyal housing construction projects in the first half of 2015. One of Saudi Arabia’s largest construction companies, El Seif Engineering Contracting, was awarded three major contracts by the Ministry of Interior with a combined value of SR13.2bn ($3.5bn). The company is building 2400 units in Jazan and 4900 residential units in Najran. The Ministry of Interior also awarded a SR2.2bn ($586.5m) contract to India’s IVRCL Infrastructure to build a total of 513 residential units in Dhahran Al Janoub, Al Qahmah and Asir.

In January 2015 Al Raidah Investment Company, the real estate investment arm of the Saudi Public Pension Agency, awarded a SR1.86bn ($495.9m) contract to MNG Holdings to build 2556 apartments in Jeddah, and in May 2015 the General Organisation for Social Insurance awarded a SR1.6bn ($426.6m) contract to Saudi Constructioneers for the development of 854 apartments in Riyadh. The Ministry of Housing, meanwhile, awarded two contracts worth a combined SR1.12bn ($298.6m) to Emdad Najed Group to build 985 apartments, and Saudi Aramco and Saudi Basic Industries Corporation were each awarded residential contracts valued at SR1bn ($266.6m) for 380 villas in Dhahran and 2600 villas in Mutrafiah, respectively.

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The Report: Saudi Arabia 2016

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