International property consultants Jones Lang LaSalle expect rents and land prices in Saudi Arabia to rise 10 per cent over the next two to three years as a result of increased demand and purchasing power fuelled by the Kingdom's recently unveiled stimulus package.
Saudi's King Abdullah last week announced a housing fund worth US$93 billion, including the allocation of 250 billion riyals (US$66.7bn) for the construction of 500,000 new homes and the raising of the upper limit of Real Estate Development Fund loans from 300,000 to 500,000 riyals.
John Harris, director and assistant to the president of the American branch of Jones Lang LaSalle told Reuters in an interview Sunday that rents and land were expected to increase "beyond the inflation rate - we expect rise of around ten per cent annually over the coming two or three years".
A recent report from Banque Saudi Fransi said that developers need to build some 270,000 housing units per year until 2015 to meet demand of 1.65 million.
Saudi Arabia faces rising problems in housing a large and rapidly growing population in addition to substantial levels of foreign workers. The Kingdom plans infrastructure spending of $580 billion.
Jones Lang LaSalle's Harris also predicted real estate developers would begin to focus on housing for middle-income families and shift their attention from the Kingdom's major cities to smaller towns which are experiencing high population growth.
On Friday Saudi's state news agency announced the establishment of a Ministry of Housing to tackle the growing crisis.