The rent for residential units continues to decrease since the downward trend began about six months ago when the exodus of expatriate families started following the imposition of dependent levy, which the majority of foreigners who work for low salaries cannot afford to pay.
Al-Emran Real Estate CEO Sulaiman Al-Emran said prices of real estate started to decline when the Ministry of Housing announced several housing projects in various parts of the country.
“The prices of land fell while the cost of owning houses rose. Investors saw that the ministry was extending assistance to Saudis to own houses, so they decided to invest in houses instead of land, thus creating an oversupply. The demand for land decreased sharply as did the demand for rental residential units,” Al-Emran told Makkah newspaper.
He added when the government imposed the dependent levy on expatriates, many of them sent their families home and evacuated their houses.
“The ministry also laid down strict laws for rental contracts between the landlord and the tenants, which made price manipulation harder to achieve,” Al-Emran.
Al-Khayalah Real Estate Office owner Thamer Al-Qurashi said since the prices of water and electricity went up, owners decided to lower the rent if the tenants were willing to cover the prices of water and electricity.
“A lot of investors in apartment buildings have lost money as there has been a higher demand on houses. The Kingdom is going through a spate of economic reforms and the housing sector is among the most affected due to low demand from expatriate residents,” said Al-Qurashi.
Source Credit: Saudi Gazette