Deputy Minister of Developmental Housing & The General Director of Real Estate Organisation at the Ministry of Housing, Mazen Al Dawood, shared his insight into Saudi household ownership.
Sputnik: What is the pace of increased housing demand?
Mazen Al Dawood: First of all, it's my pleasure to have an opportunity to talk with you and hopefully we are going to give good information about the Kingdom of Saudi Arabia, mainly in the housing sector and the real estate sector as well. Our aims - as a government goes through the Ministry of Housing to raise the percentage of Saudi household ownership as first homeownership to be reached 70 percent by 2030. The programme started in quarter 1 in 2018. Today almost we hit 60 percent and more than 60 percent. And we are on the right track. As of today - and by 2025 we going to reach 65 and by 2030 we're going to reach 70 percent. Considering that there is a new Saudi families more than 100k, so the families come as new families to us in the demand side. So this has put us in an even big challenge to provide supply as affordable houses with good quality, with a lifestyle, with a good community to ensure we satisfied the Saudi families in the kingdom of Saudi Arabia.
Sputnik: How much investment is needed to fill this gap between the growing demand and existing houses?
Mazen Al Dawood: Just to give you a dimension of the opportunity we have for the affordable housing sector - between today until 2030, we have to supply more than one point five million units, residential units across the kingdom. And we are talking about units within the community with good quality, with a good price, which is going to provide a good quality of life and the lifestyle for the Saudi families. This 1.5 million - if we translate it to the value of the money at present value, we are talking about 1 trillion Saudi riyals. This is an opportunity not only for domestic investors but also for foreign investors.
Sputnik: Is there a role for Foreign Direct Investment in this domestic housing market?
Mazen Al Dawood: All the kingdom across the nation, it is open for foreign investors in all the sectors. In housing sectors, especially - today, we have more than 50 foreign investors. We have from China, we have from the United States, from different countries - advanced countries and from emerging countries as well. Potentially, we are going to have official engagements with potential investors from Russia - very soon to be announced - to develop residential units as affordable and quality at a good price as well. So we believe engaging with a foreign investor - this is will enable the market to supply good quality at affordable prices to maintain the supply and demand balance.
This is also a good opportunity for the local investor as well. Sometimes, foreign investors - they need to speed up the operation in the country to speed up the implementation - he needs local. So engaging with the local investor to give him more to speed up to the operation, more speed up to the implementation. Today we have a good market share as an opportunity we offer it to the market, a good market share captured by the foreign investors in the market. Either they come as contractors, construction contractors, or they come as it, real estate developers.
Sputnik: How is the change of lifestyle and family structure shaping the Saudi housing market?
Mazen Al Dawood: Usually the local market of housing is changed by the demand side. And if you look at the demand, today, the Saudi population is 21.1 million, twenty-five years and below is about 50 percent of the population. And this youth segment is influencing the family. Today we see creativity, innovative ideas to be part of their house, part of their homes. Year after year we find different styles, we find different ways of building and find different ways of shaping the housing itself, how to make it more sustainable, how to make it more green, how to make it more appealing, make feel good to the Saudi families as well. So we believe this is driven by the demand from our side. We do a lot to ensure we provide the expectation of the Saudi families how the House as he would like to see it today and the future as well.
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