Off-plan sales enhance effectiveness, efficiency of Saudi real estate market: PwC

Imad Shahrouri, Housing and Real Estate Cluster Leader, PwC Middle East

The successful implementation of off-plan sales can significantly enhance the efficiency and effectiveness of Saudi Arabia's real estate market, Imad Shahrouri, Housing and Real Estate Cluster Leader at PwC Middle East, told Argaam in an interview.

This benefits local, regional, and international developers by offering early investment opportunities, reducing capital requirements, and enabling the development of larger projects, he said.

This model also aligns with the goals of Vision 2030 by increasing homeownership rates and stimulating economic growth, Shahrouri added.

He further explained that the involvement of foreign investors is set to diversify and enhance the dynamics of the off-plan real estate market in Saudi Arabia. It brings in new perspectives, best practices, new investments, and community management experiences, contributing to the market's growth and aligning it with international real estate trends.

Off-plan properties offer lucrative opportunities for both local and foreign investors, providing avenues for capital investment and participation in the Kingdom's real estate growth. This influx of investment contributes significantly to the Kingdom's GDP by stimulating related sectors like construction, banking, and real estate services, Shahrouri noted.

He indicated that the rising interest rates in 2023 have posed challenges to the off-plan market, particularly in financing. To balance liquidity and financing demands, Shahrouri suggested diversifying financing approaches, partnering with financial institutions, and government interventions for mitigating interest rates.

The PwC executive stated that location is a critical factor in the attractiveness of off-plan projects. Focusing on the quality of life, including prime locations and efficient community management, is essential for drawing potential buyers.

The Big Four firm’s real estate specialist also indicated that in order to address challenges related to distant locations, developers need to emphasize connectivity, ensure proximity to essential services, and integrate amenities that cater to the lifestyle needs of potential buyers. These key factors are not just about where the property is, but how it enhances the living experience, making these developments more appealing in the competitive off-plan sales market.

Buyers often have concerns about the quality of off-plan properties. To mitigate these concerns, the regulations form the basis of the Wafi Program, which aims to authorize and regulate off-plan property sales. Additionally, National Housing Co. (NHC) has established a robust Sharakat team dedicated to closely collaborating with all stakeholders to guarantee the quality of delivery.

Meanwhile, developers can address these concerns by implementing strict quality assurance mechanisms, adhering to construction timelines, and offering transparent and detailed information about the projects. This approach enhances client confidence and ensures satisfaction.

Off-plan residential offerings are instrumental in achieving the housing goals of Saudi Vision 2030, Shahrouri said. They provide affordable housing options, stimulate the real estate market, and increase homeownership among Saudis. These offerings have enabled the development of large and integrated projects, boosted the supply and reduced housing costs, thus playing a crucial role in the National Housing Program.

Furthermore, PwC’s latest off-plan sales report highlights the substantial impact of off-plan sales on Saudi Arabia's National Housing Program and the local real estate market, he added.

The report underscores the government's commitment to enhancing quality of life, access to housing, and creating investment opportunities. The 52% growth in off-plan sales in the first half of 2023, along with initiatives like the Wafi Program, demonstrates the sector's dynamism and its alignment with the goals of Saudi Vision 2030.