JEDDAH — Many real estate office owners in Jeddah complain that unlicensed people practicing the sale and renting of real estate are among the main causes for unchecked rises in real estate prices. They stressed that violators of iqama regulations have been carrying out their work in real estate offices for a long time, said the businessmen. They don Saudi clothes to win the trust of property owners, they claimed. The said the property owners then prefer to deal with these illegal workers instead of Saudis' offices. The latter offices provide offers that are commensurate with prices in the market without inflating them, Al-Watan Arabic daily reported Wednesday. Fadhl Al-Buainain, an economic expert, said violators of iqama regulations are part of the reason for the rise in real estate prices in Jeddah in particular. There are people who rent housing units at rates that are higher than normal. He said there are numerous housing units that are rented at low rates. This increases demand compared to supply, hence causing prices to rise. Al-Buainain said in most cases offices raise real estate prices so that the office and those working in it make profits and not the office owner. Violators of the regulations cannot work in the offices located within the city because they are being monitored closely, he said. So they rely on field work and providing enticing offers to real estate owners, especially through offices located far away from the city that are not monitored closely, he claimed. The culprits are office owners who rent their properties to violators without official documents, claimed Al-Buainain. Parties who benefit from such deals are all breaking the law, he said. Prices are artificially increasing when renting out and selling properties and a large portion of the money goes to real estate offices. This happens due to low supply and high demand. As for possible solutions for lowering real estate prices, Al-Buainain said it includes reducing the number of illegal workers in the Kingdom by at least 30 percent. This will lead to a rise in supply and decrease in demand and a big drop in rent and real estate prices, he said. He said the recent police campaign against violators has had a big impact on the real estate market. If the regulations are implemented after the three-month grace period for workers to correct their status and all illegal workers are dismissed for good, this will cause a drop in demand not only in real estate, but in other sectors as well.Houses will be affordable to the citizen, he said. The other solution is to control government spending, which will help in future in reducing demand. He said the state is spending greatly on development projects. So long as the state spends a lot, it will need workers, he claimed. This also affects the prices in the market. Meanwhile, Abdulaziz Asiri, owner of a real estate office, said 80 percent of property owners prefer to deal with expatriates and illegal brokers, as they can secure more profits for property owners. In addition, illegal workers drop their usual demand for a 2.5 percent commission. They compensate for this by demanding high prices. Each of the parties benefits from the deal at the expense of the citizen, he said.
