Business & Money | Tuesday 28 April, 2015 12:09 am |

The Saudi Arabian real estate market – long thought to be the “sleeping giant” of the region – could be set to wake up and undergo significant change in 2015, with the announcement of a new tax on undeveloped urban land and the planned opening of the King Abdullah Financial District.

Experts say that the tax, which was announced in March 2015 as one of the first major economic policy initiatives of the year, will stimulate growth by encouraging developers to build and reducing the amount of “banked” land being held back from the market. Government estimates suggest that 60 percent of urban land in in Riyadh and 70 percent in the western region is currently undeveloped.

Stimulating the development of these areas will help alleviate the Kingdom’s housing crisis by increasing the stock of affordable housing.

The opportunities created by this new dynamism – for investors, financiers and developers – will be one of the key topics under discussion at the upcoming Euromoney Saudi Arabia Conference, taking place on 5-6 May in Riyadh.

Panellists including Salman M. Al-Asmari, Chief Executive Officer, Adeem Capital; Hani Baothman, Chief Executive Officer, Sidra Capital; Salman Bin Saedan, Chief Executive Officer, Salman Bin Saedan Real Estate Group (SABS Group); and Imad Damrah, Managing Director, Colliers International Saudi Arabia, will examine the evolution of the real estate sector and the potential for an increased role for private capital.

One of the issues under review will be whether the supply gap in the Kingdom can be narrowed. As of 2014, demand for new housing was estimated to be around 275,000 units per year, compared to a supply of around 180,000 units – a significant shortfall.

Euromoney Conferences’ Regional Director, Richard Banks, said: “Real estate is a crucial economic issue, as well as a social one, and the Saudi real estate sector has been a major topic of discussion at every Euromoney Conference in the Kingdom over the last decade. We are hosting a panel of experts who have in-depth knowledge of the market to try understand whether 2015 really will be a breakthrough year for the housing and commercial real estate sectors.”

While the residential sector is anticipating a boom in development resulting from the new tax, the commercial sector is preparing to respond to an influx of new supply with the arrival of the King Abdullah Financial District (KAFD). Studies predict that more than one million square metres of office space will be added to the Riyadh commercial sector by 2016, with the vast majority located at KAFD.

The massive increase in available office space in the district, which is located north of Riyadh and contains 59 towers, is likely to impact rents and fees across the commercial sector, and could result in a migration of businesses away from the centre of Riyadh.

With both residential and commercial sectors likely to undergo significant changes in the coming months, banks and service sectors supporting the real estate market will likely have to revise their offering, and amend their strategies.

This year’s Euromoney Saudi Arabia Conference, which is co-hosted with the Ministry of Finance, will take place on 5-6 May at the Al Faisaliah Hotel in Riyadh. For more information on the Euromoney Saudi Arabia Conference, visit http://www.euromoneyconferences.com/saudi.