Wednesday, 28 November 2012

Saudi real estate auctions on the rise

Saudi Arabia is witnessing significant activity in real estate auction mainly in the Eastern region, where development plots sold in auction netted about SR3 billion ($800 million) during the last five months, up 20 per cent over last year, said an expert.

The Eastern Province and Riyadh are expected to unlock more lucrative prospects in the Saudi real estate market in 2013, given the rapid population growth and increasing number of businesses that are in continuous search of full-service projects to provide housing for their employees, remarked Omar Al-Kadi, the CEO and managing director of Injaz Development Company.

"Auctions have made crucial contributions towards sustaining the growth of the real estate sector in the fourth quarter, being the only trusted product by industry players in Saudi," Al-Kadi stated.

"The growing number of real estate auctions in the Kingdom, particularly in Riyadh and the Eastern Province, reaffirms the dynamism of the entire real estate market and is a factor in addressing problems related to housing and accommodation," he said.

In light of real estate regulations and the Saudi mortgage law, these real estate auctions will help drive the sales of residential and commercial projects in the region, he added.

According to him, Saudi is seeing significant activity in real estate auction in a bid to attract more real estate developers, land dealers and investors as recent industry reports reveal positive market indicators underlining the increasing demand for full-service urban development projects in different cities of the Kingdom.

The Eastern Province Municipality and Riyadh Municipality are keen to sustain the ongoing trend in the Kingdom by organizing real estate auctions as an ideal means to sell large-scale land projects.

Catering to both buyers and vendors, real estate auctions are being actively promoted in Saudi Arabia, particularly in the Eastern Province and Northern Riyadh, which are poised to attract more investments in the residential, commercial and tourism segments.

The latest urban developments in these segments are now mainly associated with highly developed industrial cities and advanced infrastructure, including roads, sewer networks and communication, which are all key considerations when organizing a real estate auction.

Real estate developers pointed out that the rise in real estate auctions was a healthy trend as urban projects that were fully developed and equipped with basic amenities (e.g. power supply, lighting, water, telephone lines and sewer networks) were encouraging land owners and developers to put up their projects and residential development for public auction.

In this regard, the number of real estate projects is expected to surge in the Eastern Province in 2012, with more than SR20 billion worth of property deals to be sealed, said Al-Kadi.

Riyadh, on the other hand, aims to leverage its huge potential as a safe and secure investment environment to help drive auction sales in the Kingdom during the fourth quarter.

The Saudi market is particularly in great need of full-service projects, as the project trading volume for the past four years reached nearly SR4 billion in the Eastern Province alone and is expected to increase five times in Riyadh, while registering SR10 billion in Jeddah and SR2 billion in other cities like Al Madina Al Munawara.

Auctions are witnessing a significant turnout from real estate, business and industrial investors as well as potential land owners, reaffirming the confidence of local and GCC investors in the huge potential of the Saudi real estate market, said the expert.

"To maintain sustained growth in the Saudi real estate market, auctions must achieve a balance between the expectations of end-users and real-estate investors, particularly in terms of pricing. Moreover, real estate financing is expected to hit SR200 billion and gradually increase to reach over SR300 billion in the next five to 10 years," he added.

As such, Injaz expects a significant growth in the real estate market of Northern Riyadh in the short term, especially as ongoing real estate auctions are positioning Northern Riyadh as a one of the leading business, residential and tourist destinations for investors, residents and visitors, he stated.

Injaz, he said, looks forward to launching its Al Gamra 10 project as part of the Al Gamra Project which is strategically located between the north highway and King Fahad Road towards the north on Abu Bakr Road. "The 566,000 sqm project will be put up for auction this November,” he added.-TradeArabia News Service

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