Saudi Arabia's $640bn housing investment

The city of Jeddah

The oil-rich Saudi Arabia has said they are to invest USD$640 billion over the next 20 years in order to build five million new housing units, according to plans unveiled by Jeddah Municipality.

The new strategic plan states that the city of Jeddah will need almost a million housing units over the next two decades in order to cope with the ever-increasing flux of expatriates and nationals from the rural areas coming to the city for work.

Unlike other parts of the Middle East such as Dubai, Saudi Arabia's property and construction sectors have not been hit as hard by the economic recession and still pays a vital role in the country's economy. While its contribution may not be as great as the oil sector, it still contributed 6.8 percent to the Kingdom's GDP in 2004 and this is expected to rise to 7.2 percent this year.

Total investment is expected to exceed the USD$400 billion barrier according to projections for 2010.

Low-cost housing units

While money has never really been an issue for the oil-rich, opulent Kingdom of Saudi Arabia, Jeddah Municipality has said that the creation of some many units will be aided by the construction of 'low cost housing'.

In order to also help future homeowners, as well as the property sector, a new mortgage law has been implemented giving lenders more rights including the ability to foreclose on properties  in default.

The mortgage law will increase the numbers of those who seek to own housing, spurring local developers to increase construction of housing units it is hoped.

The unveiling of the new plans was timed to coincide with the Jeddah International Real Estate, Finance and Housing Exhibition 2010 which opened on Monday at the Jeddah Centre for Forums and Events.

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Timon Singh

Timon Singh is a graduate of Liverpool University where he received a degree in Social and Economic History. He has previously worked for BBC Magazines on BBC Who Do You Think You Are? Magazine, the publication for the popular genealogy show.

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