The major challenge in developing affordable housing in Saudi Arabia to meet population demand is to attract more private sector involvement in the financing and building, said an expert.

“Private financing arrangements should be facilitated by the new mortgage law that is at an advanced stage of discussion prior to full enactment,” said Farrukh Iqbal, director of the Mena region for the World Bank.

“On the building side, further thought may have to be given to modifying building codes and density regulations to accommodate further social housing developments.”

"Social housing needs are growing in Saudi Arabia and the demand is being driven by demographic and economic developments,” he added.

In recent months Saudi Arabia has announced an abundance of social housing development plans aligned with the growing population needs. Saudi Arabia’s five- year plan sets the current target at one million housing units, but even this will only meet 80 per cent of projected demand.

Although the Saudi Arabian Ministry of Housing pledged to allocate additional funding of $67 billion to construct residential housing, on top of previous funding already committed through the 2011 budget, there still seems to be a lot of confusion in this market over what financial frameworks will be implemented to support the necessary housing developments, he said.

“Because the housing is intended to be 'social' and thus affordable to modest means, there will have to be some public sector involvement to provide policies, regulations, infrastructure and incentives that would induce the private sector to make the necessary level of private investment,” Iqbal said.

Exploring the successful development of social housing when providing robust real estate finance frameworks is one of the key challenges that will be addressed at IQPC's upcoming Social Housing Development Summit Saudi Arabia, being held at the Radisson BLU Hotel in Riyadh from October 9 to 12, where Iqbal will be delivering a keynote presentation. – TradeArabia News Service