Real estate experts say that rising land prices in the Kingdom's major cities are preventing people entering the housing market, with the last two years showing a 100 percent increase in the cost of land plots. The rise, they say, may be attributed to high demand against weak supply, in addition to a significant turnover in the sale and purchase of plots. Residential land in Jeddah districts such as Al-Nuzlah, Al-Marwah, and Al-Na'eem range between SR650,000 and SR800,000, while prices in newly-planned districts of the northeast outskirts like Al-Hamdaniah, Al-Hinakiah and Al-Majed range between SR350,000 and SR450,000 depending on the location and area. Owner monopolies Real estate specialist Saad Al-Qarni says the most obvious solution is to bar any individual from purchasing a large number of plots in planned districts. “One of the main reasons for the price rise in main cities is the purchase by real estate investors of whole districts or large parts of them, enabling them to control prices or leave the plots as they are for several years without selling them. This is reflected in the fact that many planned districts in major cities are named after the owners. This delays the construction process and prevents city expansion. Someone who wants to move to a private home has two options. Take on huge loans or save up the money.” “We need to prevent single ownership exceeding five percent of a planned district, following the system used in the Saudi stock market. High single ownership percentage means a control on prices to keep them high.” “Another solution is shared ownership of land to permit construction. This would reduce prices by 50 percent.” Smaller housing units “The cost of land and construction on it could be addressed with smaller housing units and villas. This would make purchase and construction less costly due to the smaller area of land,” says Sa'eed Al-Ghamdi, another real estate expert. Al-Ghamdi says that another solution is to purchase through affordable installments or establishing a hire-purchase system (renting leading to ownership). He says these would be within economic regulations, as a down-payment is made and the rest is paid in monthly installments or another set schedule.
