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MORTGAGE LAW EFFECT

Saudi Arabia housing rents set for steep hike

JEDDAH, June 12, 2015

There will be a sharp rise in apartment rental prices across Saudi Arabia over the next six months, thanks to the effect of the 30 per cent mortgage law, said a report.

Stability is likely only in 2017, when the kingdom’s government will deliver its units onto the market, said the Arab News report.

"Given the effect of the 30 per cent mortgage law and our analysis of the rental market in Q1, which saw rents increase across the residential market, specifically for apartments, we expect that rents will continue to rise over the remaining six months of 2015," said Jamil Ghaznawi, national director and country head of Jones Lang LaSalle in the kingdom, was quoted as saying.

The scheduled completion of 15,000 units by the Housing Ministry in 2017 would substantially increase supply of affordable housing for ownership in Jeddah, he said.

This would reduce demand for rental stock and consequently stabilise or see a drop in prices, he said.

This, however, would depend on the ministry delivering this units, with delays expected in the majority of the units as the three developments in Jeddah are still in the early phases of construction, said the report.

Meanwhile, rents in the apartment sector have risen 7.5 per cent more than sale prices, while residential transactions registered by the government have substantially decreased over the last quarter as a result of the 30 per cent mortgage law and falling oil prices.

The sales of villas and apartments have also dropped 59 per cent and 27 per cent respectively since the implementation of the mortgage regulations in November last year, it added.




Tags: Saudi | rents | house | apartment |

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