Saudi Arabia will need around one million new homes over the next five years to keep up with an estimated 3.3 per cent compound annual growth rate (CAGR) in demand, according to a recent study.

Jiwar Real Estate Management & Marketing, a leading real estate firm and the marketing arm of the Saudi Bin Laden Group, in its study said the Kingdom at this pace will be short of 5.5 million units by 2014.

The study said the residential sector had grown substantially to account for 70 per cent of the Kingdom’s real estate market.

'Housing demand has risen steadily over the recent years due mainly to a young and rapidly growing population constantly seeking affordable homes. The other 30 per cent is distributed among offices, retail outlets, hospitality and industrial sectors,' it added.

The study also revealed that the short- to medium-term domestic residential outlook is very positive as demand is expected to surpass supply by 50,000 units annually over the next four to five years.

The residential sector, which encompasses villas, apartments, duplexes, traditional houses, and residential compounds, is geographically divided into three main local regions; the Central Region (Riyadh), the Eastern Province (Al Khobar, Dammam and Dhahran) and the Western Region (Jeddah, Makkah and Madinah).

'Saudi Arabia continues to be one of the few property markets in the region capable of sustaining growth within the global recession. The residential segment has been the main driver; average occupancy within the six major city markets is in fact at around 96 per cent,' said Dr Saleh Bin Abdullah Al Habib, CEO, Jiwar Real Estate Management & Marketing.

'While Jiwar will help sustain the momentum of the residential business by focusing on quality and expedient delivery, we will also push signature developments to emphasize the diversity of available property options in the Kingdom,' he added.

Jiwar is actively involved in the Abraj Al-Bait Towers being developed by the Saudi Bin Laden Group in Makkah. 'Upon completion, the 595 metre-high structure will occupy a floor area of 1.5 million sqm and become the world’s tallest and largest hotel,' Al Habib added.

'It will equal the area of the current record holder, Terminal 3 at the Dubai International Airport and surpass the Rose Tower in Dubai as the world’s tallest hotel. Currently the second tallest building being constructed, the Tower will oversee the revered Kaaba in Makkah.'

'The cities of Riyadh, Jeddah, Mecca, Madina, Damma and Al Khobar are the top residential markets in Saudi Arabia. The property business in these areas is dominated by rented units, which account for an average of 83 per cent of housing,' Al Habib added.

According to the study, the number of households in Riyadh City was expected to rise to around 1.05 million by 2014, representing a CAGR of 3.7 per cent.

'Jiwar will continue to monitor key market trends to reinforce the Kingdom’s strong reputation as a residential, lifestyle and religious tourism market,' Al Habib added.-TradeArabia News Service