Leading UAE developers have lauded the Saudi government's move to set up a new state-backed development company as part of its efforts to tackle the housing shortage problem, said a report.
The new firm will give businesses plots of land, and provide a mortgage guarantee fund that would serve as a useful method for bringing financing to schemes, reported Bloomberg.
This strategic move by the government will breathe new life into a mass house-building plan that was announced by the late King Abdullah in 2011 issuing a decree to set aside SR250 billion ($66.6 billion) for construction of half a million homes, the Saudi Arabia’s housing minister Majed Al Hogail was quoted as saying in the report.
An industry expert said the new company was likely to be financed, in part, by the white land tax that was introduced in January.
The property consultancy JLL had predicted more government action on affordable housing in February, pointing out that 60 per cent of households in the country fall within the middle-income segment, which it defines as those earning between SR6,000 ($1598) and SR20,000 ($5329) per month.
Welcoming the move, Dubai's Emaar Properties said it will further energise the property sector and help meet the growing need for houses, especially from the kingdom’s youth population.
The company has been involved with three master-planned schemes through its residential-led Saudi joint venture, Emaar Middle East, including a SR4.6 billion ($1.22 billion) masterplanned villa community in the Eastern Province known as Al Khobar Lakes.
Leading Dubai developer Sobha Group dubbed it as a strategic move as "land acquisition was very expensive and it was not as freely available in the market as in other parts of the GCC."
“So I think the government is playing a role with this new company they are putting together," stated Ajay Rajendran, co-chairman Sobha Group.
"At this point in time, we are not looking at operations in Saudi Arabia but at some time in the future, when we are ready, we would be happy to explore it," he added.