Home prices and rents in Saudi Arabia’s two largest cities increased during the first quarter amid limited residential supply and an easing in bank lending conditions, Jones Lang LaSalle said.
In Riyadh, the kingdom’s capital, villa and apartment prices increased to 4,236 riyals and 2,628 riyals ($1,129 and $700) a square meter, respectively, the property broker said in a report e-mailed today. Villa rents jumped 8 percent in the quarter compared with the same period a year earlier, while apartment leases climbed 13 percent.
Saudi Arabia’s population has quadrupled in 40 years to 28.7 million, creating a widening housing shortage. The Arab world’s largest economy needs 900 new homes a day over the next five years to meet demand, Jones Lang LaSalle said March 2011.
“Commercial banks and financing companies have relaxed their financing terms for end users,” the report said. “Families can now submit a joint mortgage application to fulfill the salary criteria.”
Apartment rents will probably increase further throughout the year if housing allowances for government employees are raised, wrote John Harris, Jones Lang’s head of research. At least 130,000 homes will be built by 2015, adding to the city’s existing 889,000 homes, he said.
Sale prices for villas in the Red Sea city of Jeddah, the kingdom’s second-largest, jumped 11 percent to 4,600 riyals a square meter. Apartment prices also rose.
“Villa rents increased by 4 percent in the preferred Western region in first quarter to an average of 201,000 riyals per year,” Jones Lang LaSalle said. “Villas in residential compounds have shown the greatest increase, due to the preferences of many expatriate families to live in gated-villa communities.”
Approximately 4,000 housing units were completed in the first quarter and a further 12,000 additional units are to be finished this year, it said.