Unlocking valuable insights, PwC Middle East’s latest report titled “Saudi Arabia’s off-plan market: A driving force fueling a vibrant and sustainable society” sheds light on the pivotal role off-plan sales models can play in alleviating the housing gap of 1.5 million units in Saudi Arabia. This strategic approach not only enhances the efficacy and affordability of the real estate market but also aligns with the ambitious goals outlined in Saudi Vision 2030.

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Key Findings and Objectives: Saudi Arabia aims to elevate homeownership from the recorded 47 percent in 2016 to an ambitious 70 percent through the National Housing Program. To achieve this, a significant annual increase of 1.5 million residential units, or 115,000 units yearly, is imperative. Initiatives by the Kingdom’s National Transformation Program and the Ministry of Municipal and Rural Affairs and Housing (MoMRAH) include ready-to-move-in units, financial institution housing assistance, and a legislative framework for housing initiatives.

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Off-Plan Properties as Catalysts: Off-plan properties emerge as an opportunity for both domestic and foreign investors to contribute to more affordable housing options in a well-established real estate market. These sales models, tailored for various beneficiary segments, not only stimulate growth in the banking industry but also foster multiple property purchases, driving expansion in the real estate brokerage sector.

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National Housing Program Driver: Imad Shahrouri, PwC Middle East’s housing and real estate cluster leader, emphasizes the significance of off-plan sales in the National Housing Program. These sales have accelerated home ownership, empowered developers to undertake large projects, and facilitated collaboration across the real estate ecosystem.

Rising Trends and Challenges: Off-plan property sales in Saudi Arabia witnessed a remarkable 52% growth in the first half of 2023 compared to the same period in 2022. However, challenges such as consumer preference for ready-made units, project location concerns, rising interest rates, shortage of experienced developers, and quality assurance issues pose obstacles.

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Strategic Solutions: Overcoming barriers requires a cultural shift, efficient marketing strategies, and proper pricing for off-plan sales acceptance. Addressing location concerns involves understanding the importance of proximity to essential services. Balancing financing demands and liquidity is crucial amidst rising interest rates. To tackle the scarcity of developers, Saudi Arabia should attract regional expertise and train local developers. Quality assurance measures and timely project completion are essential to build investor confidence.

Fulfilling Vision 2030: Successful implementation of off-plan sales can enhance the efficiency of Saudi Arabia’s real estate market, attracting local, regional, and international developers. Overcoming obstacles is crucial to realizing the full potential of off-plan sales, advancing Vision 2030’s objectives, and fortifying the Kingdom’s collaborative real estate ecosystem.