Saudi real estate needs more transparency, analysts say

Saudi Arabia’s real estate market currently ranks low for transparency, but the kingdom is taking steps towards improving this, analysts told Argaam.

According to property consultancy JLL’s 2014 transparency index, Saudi Arabia ranks low, along with other countries in the MENA region like Egypt, Jordan, Oman, and Lebanon.

To make the sector more transparent, the kingdom needs to provide more “open data policies,” such as allowing online access to quality data on property transactions and land registry, JLL’s Country Head KSA Jamil Ghaznawi told Argaam.

JLL recently signed a Memorandum of Understanding (MoU) with the Saudi Eastern Province Chamber of Commerce & Industry to boost transparency in the province’s residential, retail, office and hospitality real estate markets. 

As an independent consultant, JLL will assist the Dammam-based Chamber to improve quality and accuracy of data being collected and shared in the market by collaborating directly with major retailers, developers, hoteliers, and government bodies, among others.

Ghaznawi said the consultancy plans to work with members of the committees belonging to the Chamber. This would include collecting data directly from stakeholders to ensure its accuracy, speaking with members to better understand issues in the market, and listening to stakeholders’ suggestions to increase transparency.

“It is encouraging to note that the recently announced Saudi Vision 2030 indicates a greater emphasis on market transparency. Going forward, JLL would look at partnering with more stakeholders and further enhance our transparency drive in the Saudi real estate market,” Ghaznawi added.

Property consultancy Cluttons also notes that current transparency levels in the kingdom remain lower than in the region, although the government appears keen to change that across all major industries under Vision 2030.

“Recent measures taken by Saudi authorities are expected to have a positive impact on both quality and availability of data, which has so far been limited. When available, the quality of information remains inadequate as it lacks accuracy and reliability,” said Ramzi Darwish, consultant – international corporate services at Cluttons.

This can be improved by establishing a governing body that regulates the real estate market, to ensure distribution of information, and train property professionals on best practice standards, Darwish told Argaam.

When asked whether real estate transparency needs to be improved in the rest of the GCC and wider Middle East as well, both analysts said it did, noting that Dubai could serve as a benchmark for the region.

“Currently, Dubai is the most transparent market in the region, but despite progress between 2008 and 2016, it remains in the semi-transparent level with a global ranking of 49 out of 109 markets covered in our 2016 survey,” Ghaznawi said.

Still, the Dubai Land Department could serve as a role model for other GCC property markets in in terms of policies, standard practice and training, Darwish added. 

Write to Jerusha Sequeira at jerusha.s@argaamnews.com