Saudi okays real estate ownership by expats
Riyadh, February 1, 2011
Saudi Arabia has decided to allow expatriates living in the kingdom to purchase real estate, according to a news report.
The country's Shoura Council, presided over by Chairman Abdullah Al-Asheikh, agreed to add a new article to the real estate and investment law to allow foreign residents to own properties in the Kingdom during its 77th session, according to the Arab News report.
Muhammad Al-Ghamdi, the council's secretary-general said after the meeting that a proposal by the Shoura's Economic Affairs and Energy Committee to allow non-Saudis living in the kingdom to purchase real estate in the country was unanimously approved.
According to Deutsche Bank AG research, Saudi Arabia - which is the Middle East's biggest economy - needs 1.2 million new homes by 2015.
Moves to allow foreign residents to own properties in Saudi Arabia will have little impact on the kingdom’s fledgling real estate market, a Saudi-based economist said on Monday.
However, poor access to mortgages meant the ruling – which must be approved by the Saudi Cabinet - is unlikely to prompt an increase in sales, John Sfakianakis, chief economist of Banque Saudi Fransi was quoted as saying in an Arabian Business report.
“If Saudis can't locate affordable homes I don't think expats will find it easy to afford property.”
If the law is extended to include foreign companies, however, it could spark a rise in commercial real estate sales, stated Stefan Burch, associate director at Cluttons real estate agency in Bahrain.
'Foreign investors would consider purchasing office buildings and retail property as a way of gaining exposure to the Saudi Arabian economy which looks set to lead the Gulf in terms of recovery over the next two to three years,' he said.
Analysts, however, have said increasing access to home loans is key to overhauling the market.
Less than 35 per cent of Saudi nationals own their home. According to research firm RNCOS, the cost of a mortgage typically represents 41 per cent of monthly income for young buyers.
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