A special authority is being set up to oversee the real estate sector in the Kingdom. According to sources quoted by Al-Jazira Arabic daily, the authority will define the rules and responsibilities governing the sector's activities. The authority will seek to reform the Saudi real estate sector which is notorious for being badly regulated. Previous efforts to regulate the sector were hamstrung by the overlapping of regulating agencies such as SAMA, the ministries of Commerce, Municipal and Rural Affairs, and Capital Market Authority. Investors say “one major authority is required to unify the sector”. The real estate higher authority will “serve as a referral umbrella of the sector”. “Legislation will guarantee real estate financing companies are independent from banks as is the case of the financial intermediary companies in the financial market. This will allow banks to concentrate on basic banking practices and safeguard them from the risks of financing the real estate sector,” the source said. “SAMA is surveying the financial sustainability of real estate development companies. It is checking their financial blankets, organizational structures and their ability to expand in their investments,” the source said. It is expected that the bodies involved in writing the new laws of the authority will announce them very soon. The demand for housing in the Kingdom is among the highest in the world because of the wide gap between supply and demand in the real estate market. It is expected that SR1.3 trillion will be injected in the real estate sector in the Kingdom during the next 10 years in order to secure over two million residential units.
