Deals soon for $100B housing scheme

RIYADH — Saudi Arabia is close to striking deals with South Korean and Chinese firms under a $100 billion project to build one million low-cost homes over the next five years, its housing minister said on Wednesday.

The government, which last year signed memorandums of understanding with those countries to develop some 200,000 properties on state land, expects to receive final proposals from the companies by mid-May, Majed Al Hogail said in an interview.

As the country works to resolve a shortage of affordable housing, Hogail is also seeking partnerships with American builders and met with U.S. Housing Secretary Ben Carson this week.

“We are already talking to some developers. We think very soon there will be some agreements signed,” he said.

Like many Saudi economic policies, the programme relies heavily on private sector participation because the government, its budget strained by low oil prices, can no longer afford to stump up much money.

State funds will provide seed capital but Riyadh hopes private firms and banks will provide much of the investment and bear some of the risk.

“We are now developing the PPP (public/private) programmes with local and international developers. We hope by having both of them and by adopting new building technologies, we can respond to the demand within five years,” he told Reuters. “At least if we respond (with) 1 million units, that would be a good success.”

Some 1.6 million Saudis are currently on waiting lists for government housing programmes.

Over the last year, the government has tweaked financing rules to encourage mortgage lending and introduced a “white land” tax to push more undeveloped urban land into the market. Hogail estimated the tax would bring in SR1 to SR2 billion ($267 million to $533 million) annually.