The real estate sector is key to unlocking Saudi Arabia’s ambitious housing goals and boosting its economy. A new report by PwC Middle East reveals that off-plan property sales can increase home ownership, stimulate and grow the banking sector to create financial solutions that could cater to different beneficiary segments, grow the real estate brokerage market, and stimulate multiple investor purchases.
The country plans to increase homeownership from 47% to 70% by 2030. According to PwC Middle East, fulfilling this vision requires a staggering 1.5 million new housing units or 115,000 units annually, and off-plan sales are seen as a key strategy to bridge this gap.
Off-plan sales, where buyers purchase homes before they’re built, offer a potential. They can be cheaper than ready-made options, allowing developers to cater to a wider range of budgets. This, in turn, boosts GDP, stimulates the banking sector, and creates opportunities for investors.
The first half of 2023 saw a staggering 52% growth in off-plan sales, making homeownership a real possibility for a new generation. However, the report acknowledges the challenges inherent in a relatively new market.
Lack of clear regulations, low awareness, and trust issues require strategic solutions. Initiatives like clear regulations, public-private partnerships, and empowered developers are crucial to bridging the gap between supply and demand.
While the potential of off-plan sales is undeniable, success hinges on addressing key areas. Effective marketing, convenient locations, balancing liquidity with financing options, attracting more developers, and ensuring quality assurance are crucial components for building a sustainable, thriving off-plan market.
Highlighting the findings, Imad Shahrouri, Housing and Real Estate Cluster Leader, PwC Middle East, said: “Since its launch in 2016, the off-plan sales approach has become a key product to achieve the objectives set out in the National Housing Programme. It has been a key factor in accelerating the homeownership process, increasing real estate developers’ capabilities to undertake large and integrated projects, and stimulating supply.”
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