Outlook for Saudi property market 'positive' in long term, says Falcom

The outlook for the Saudi real estate market is "positive" in the long term despite weak performance in 2016 and 2017, Falcom Financial Services said in a recent report.

The real estate market is expected to see growth, driven by the Saudi government procedures that are aimed to face major challenges to the industry.

The property sector will be supported by several factors, including regulatory developments, higher loan-to-deposit ratios, religious tourism, ongoing mega infrastructure projects and increased public-private partnerships.

The social reforms implemented by the Kingdom along with its initiatives for urban development are also likely to reflect positively on the sector, the brokerage firm added.

Meanwhile, potential risks include delays in project deliveries on implementation of the value-added tax (VAT) in January and higher interest rates, which could impact mortgage loans.

Among other risks are the expat fees, which could also curb demand for residential units, and volatility in oil prices that could constrain government finance.

Saudi REITs are forecast to attract more flows on the potential upgrade of the Saudi market to Emerging Market status, the report added.