Saudi Arabia to build over 1m homes to solve housing crisis

Saudi Arabia is taking an unprecedented hands-on role in housing finance and development as it seeks to re-energise a plan to build over 1m homes and make ownership more affordable.

The housing ministry plans to create its own development company and start a mortgage-guarantee fund to encourage banks to increase lending, said minister Majed al-Hogail.

“We are looking to improve the productivity of the local developers”, but also trying to attract international developers and teaming consultants and builders for some projects, he said.

Despite its vast oil wealth, the country faces a shortage of more than 1.5m homes over the next five years and most young families are unable to own their homes due to a lack of lending and construction.

Since taking power in 2015, the regime of King Salman has been working to realise the home-building vision set out by former King Abdullah in 2011.

It imposed a tax on urban land that’s not being developed by its owners.

The ministry is now turning to a profit-sharing plan that helped Dubai turn desert land into a thriving metropolis.

The country must attract large foreign builders because the capacity of local contractors is too small to manage the scale of projects it envisages.