Al-Hogail says 60% of real estate projects in Saudi Arabia use modern construction tech

Minister of Municipal, Rural Affairs and Housing Majid Al-Hogail

Minister of Municipal, Rural Affairs and Housing Majid Al-Hogail said that most of the real estate projects in the Kingdom currently use industrial technologies for building, of which 60% avail modern construction technology.

In cooperation with the Ministry of Industry and Mineral Resources, the cost of building using modern technologies became equal to that of traditional construction, Al-Hogail told the Real Estate Future Forum held today, Jan. 23. He noted that the cost was high in the past.

Real estate developers in Saudi Arabia, according to Al-Hogail, are divided into three categories, the first and second of which include over 15 and 80 players with the capacity to build more than 2,000 and 500-2,000 housing units per year, respectively.

In the third one, about 100 real estate developers are able to roll out a range of 100 to 500 housing properties annually.

Al-Hogail said there are currently about 600 developers on the Wafi Program, which was launched by the Saudi government to authorize and regulate off-plan property sales. “We are working to integrate them under the aforementioned categories,” he indicated.

The minister highlighted that the ministry aims to attract foreign investments into the Kingdom’s real estate sector.

Furthermore, local banks' loan portfolio grew in the last four years from SAR 2.2 trillion to SAR 2.9 trillion, said Al-Hogail, explaining that more than 50% of such growth came from the real estate sector.

According to Al-Hogail, banks are currently facing challenges represented in interest rate hikes and expectations related to capital profits for the next 20 years. He pointed out that estimates showed a decline in profits and interest after two years.

Elsewhere, he revealed that the ministry is discussing with banks, led by the Saudi Central Bank (SAMA), the near-term rollout of products that reduce financing costs for real estate developers.