Huge property growth expected in Saudi

Population growth and an increasingly wealthy middle class are creating a boom in high-end real estate development in the Gulf, especially in Saudi Arabia where government reforms are encouraging development, it is claimed.

But there is concern that the global financial crisis is having an effect and that some developments could be delayed or even cancelled as large developers become more cautious about borrowing from banks in the current climate.

The Saudi market is a budding environment that has ample opportunity for real estate development due to its great expanse of land and richness of resources, according to Sami Al Hussain, Business Development manager for DAMAC Properties.

'Saudi Arabia is in the midst of a population boom that will necessitate an estimated 1.3 million units over the next seven years, representing an annual requirement of 190,000 units, and requiring a total investment of more than SAR 680 billion,' he said.

'These positive factors are vital concerning our strategic expansion and development plans in the Kingdom, where we have already succeeded in establishing a strong leadership position in the luxury property market, he added.

But not all developers in the region are as bullish.

Emaar, master developer of the King Abdullah Economic City, one of the largest projects in the Gulf, is reigning back on some aspects in order to be less reliant on the banks.

'We have to adapt. We are aware that on a project of this size you need the banks, but our objective is to minimise our dependence on loans and to balance what we are building with what we are selling,' said Hesam Joma, executive director of projects at Emaar's The Economic City.

He confirmed that the credit crunch is forcing the company to delay some work. It will move forward with the mid-range housing aimed at professional workers but delay plans for the luxury villas.