What does it mean for Saudi to launch a real estate exchange? What is its importance for the real estate sector, one witnessing great prosperity in the Kingdom?
There is no doubt that the real estate sector is one of the most prominent economic sectors in Saudi Arabia, one that contributes effectively to the country’s GDP. It generated about 12.8 percent of the Kingdom’s non-oil GDP in the first quarter of 2023.
The real estate sector is also an engine for investment in the Kingdom due to its influence in about 120 industries.
However, several challenges still face this sector, such as governance, transparency, and raising the effectiveness of the property market.
Hence the idea of launching a real estate exchange that will include a number of services and contribute to accelerating the implementation of real estate operations. It will provide high quality and efficient data while achieving transparency and freedom of supply and demand, helping enhance equal opportunities and breaking a monopoly on trade.
Riyadh considers that the launch of a real estate exchange is a unique model as an integrated platform for real estate wealth management, as it achieves transparency and reliability by providing real estate trading, integration and sorting services electronically around the clock. Freedom of trade, speed in the implementation of operations, and accuracy in providing data work to enhance the investment climate.
In 2021, the Saudi Ministry of Justice launched the Saudi Real Estate Exchange on a trial basis, which included direct deals, real estate offers, new deals, mortgages, sukuk inquiries, and real estate deed updates.
It announced the digitization of more than 180 million real estate documents, as part of the real estate wealth digitization initiative, one of the Ministry of Justice’s initiatives in the National Transformation Program, through the central digitization laboratories, which operate around the clock, and are the largest of their kind in the Middle East.
The labs have digitized paper real estate deeds that are more than three meters long, dating back 100 years.
Following the digitization of real estate document assets, real estate wealth management procedures will be transformed into a fully digital and electronic procedure, with the aim of enhancing real estate security.
The Cabinet recently decided to amend the controls related to the sale or rental of real estate units off-plan, by replacing the phrase “General Real Estate Authority” with the phrase “Ministry of Municipal and Rural Affairs and Housing”, and replacing the phrase “Board of Directors of the General Authority for Real Estate” with the phrase “Minister of Municipal and Rural Affairs and Housing”.
A committee was formed to develop a mechanism for dealing with the assets of the off-plan real estate unit sale and lease committee, its employees, allocations, budget, projects, programs and initiatives.
Plans by Crown Prince Mohammed bin Salman to increase home ownerhip by 70 percent by 2030 have seen a wave of government incentives, new housing developments and an increase in the number of residents and expatriates looking to establish themselves in the kingdom.
There are many reasons for the increased demand for home ownership in Saudi, and a range of initiatives – many in collaboration with the private sector – have improved the supply of housing units in the country. Easy access to mortgage finance for Saudi families and reform of housing policies and planning have also contributed to increasing home ownership.
Reforming the country’s housing sector and enhancing access to affordable housing for Saudi families are key components of the Kingdom’s Vision 2030 initiative.
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