Saudi woos foreign firms to build 1.5 million housing units
By Andrew Torchia
JEDDAH, Saudi Arabia (Reuters) - Saudi Arabia will offer foreign and local property developers partnership deals in a vast housing construction programme that aims to build 1.5 million homes over the next seven or eight years, the housing minister said on Wednesday.
"We are preparing five or six types of partnership between the ministry and the developer," Majed al-Hogail told a news conference on the kingdom's economic reform plans.
"The developer would be an investor, bearing risk and designing products in line with market demand," he said. The ministry would support projects by providing information and help to arrange financing.
A shortage of affordable housing for a young and growing population of about 21 million citizens is one of Saudi Arabia's biggest social and economic problems.
In the past, the government earmarked billions of dollars of state money to build homes. But bureaucracy and difficulties obtaining land kept the pace of construction agonisingly slow, and the plunge of oil prices in the past two years means the government no longer has ample funds to throw at the problem.
So Saudi Arabia is now adopting a different approach, seeking to persuade private investors to design and build housing while the ministry largely acts as a regulator.
"We want to catalyse the private sector, to be a partner with it -- we want them to play the prime role," Hogail said.
Major Saudi property developer Dar Al Arkan (4300.SE: Quote) said this week that it was in talks with the ministry on a partnership to build housing, fuelling a leap of more than 20 percent in its share price over two days. Continued...