Izzeddin Ahmed Saudi Gazette JEDDAH — Demolishing older structures and replacing them with newer ones in major cities has gone up by more than 30 percent in the last few years, according to real estate experts. They said many owners of old buildings and houses tend to demolish them in order to construct newer and larger buildings to increase income. “This phenomenon has increased remarkably during the past five years especially in the traditional residential districts in the large cities,” Faisal Al-Sayrafi, chairman of the Financial Consultations House in Jeddah, told Saudi Gazette. He said the trend was encouraged by a number of factors such as permissions granted by some municipalities, including the Jeddah municipality, to landlords to increase the number of floors in their buildings. He said other factors included the rising rents and the high prices of the new housing units in addition to credit facilities given by the Real Estate Development Fund. Al-Sayrafi expected the process of demolishing old buildings to construct new ones in their places would continue during the coming years, particularly in the light of the rising demand for housing units. He said more than 60 percent of Saudis live in rented houses. He was confident that the replacement process would boost the real estate market and, as a result, housing units would increase by more than 40 percent especially when an existent three-story building would be replaced by a five-story one in the same area. Al-Sayrafi said citizens, particularly from the middle class, prefer to invest in real estate because it does not have much risk and does not need a large capital. He asked the real estate developers to build better housing units which could be invested for a long time. “The distinctive product will be in the interest of both the investor and the consumer,” he said. He noted that the high prices of land has driven lower and medium income citizens toward purchasing ready made homes on installment because they would not be able to purchase land and build houses on them. According to sources at the Ministry of Municipal and Rural Affairs, the licenses granted for the replacement of old buildings with newer ones increased by more than 300 percent during the past 10 years. Licenses went up from 37,585 in 2001 to 112,362 in 2011. The head of the department of licenses at the Jeddah municipality Dr. Yasser Adas said last year the municipality granted 14,476 licenses to replace old buildings with new ones registering an increase of 30 percent over the previous year. “The construction of new buildings in place of existing ones takes place mainly in the old traditional residential quarters. This phenomenon does not at all exist in the new districts,” he said. A leading realtor in Jeddah, Abdullah Al-Balawi, said the high feasibility of real estate investments prompted many landlords to demolish their old buildings and construct new ones in their places because they would ensure more income if they rented or sold them. “The process of replacement constitutes more than 60 percent of the construction activities in the old districts in Jeddah namely Al-Faisaliyah, Al-Bawadi, Al-Safa, Al-Aziziyah, Anakish, Al-Salamah and others,” he said. Abdullah Al-Ahmari, a real estate expert, has strongly warned that the construction of new buildings in old districts would increase the pressure on the basic infrastructure in these areas. “With the increase in housing units, the number of residents will automatically grow. They will increase pressures on the basic infrastructure in these districts,” he said. Al-Ahmari also warned that the replacement of old buildings by new ones on the same sites would not solve the problem of housing. “This is only a temporary solution to the problem and not a lasting one,” he said. He asked the municipalities to transfer the density of population to the new residential quarters which are better planned and have stronger basic infrastructure including roads and services. “In the older areas of more than 20 years ago, the height of each building should not be allowed to be more than one story,” he added.
