(MENAFN- The Peninsula) The Peninsula
Some 2.5 million expatriates are expected to leave Saudi Arabia because of the expat tax imposed by the authority.
As Saudi Arabia introduced the so-called expat tax, meaning foreign workers must pay $26 per dependent living in the kingdom with the tax set to rise rapidly in the coming years, 2.5 million of the country's 10 million expatriates are expected to leave by the end of next year as foreigners' tax-free lifestyle comes to an end, reported Financial Times.
Saudi Arabia's property market has been hit hard by the kingdom's stalled economy and austerity drive, all designed to help the government cope with low oil prices.
Rents in some parts of the country could fall by more than 50 percent over the next year as millions of expatriates prepare to leave the Gulf state as the government takes aim at them to shore up cash, Financial Times reported.
The impact of the country's expatriate tax, austerity drive and sluggish economy is already being felt with sales of property falling three percent in the capital Riyadh, while new office rental deals in Jeddah fell by 9 percent in the second quarter.
The new regulations on expats are affecting the outflow of foreigners, which means population will decline, affecting demand, Mazen al-Sudairi, head of research at al-Rajhi Capital told the daily.
The country's diversification and austerity drive was initiated by Saudi Arabia's Crown Prince Mohammed bin Salman, and was intended to strengthen government coffers following the 2014 oil price crash.
Among the measures were levies on expatriates to help cut the government deficit and encourage Saudi companies to recruit nationals.
The government has also attempted to tackle a housing shortage for Saudis with the construction of new homes and soft loans which could also impact on property prices.
Yet, despite Riyadh meeting its target on defence spending in the first half of 2017, it could be seriously short of providing the capital needed to fund the expensive home buiding programme.
There are already signs that the crown prince's ambitious economic vision for the country could be flawed as the UK financial daily revealed the crucial National Transformation Plan targets are being revised.
Over-ambitious deadlines for meeting targets are being extended or dropped due to a failure to rescue the economy and reduce its reliance on oil.
There is a recognition that too many of these targets were too aggressive and maybe having too much impact on the economy, a government insider told the daily.
Flexibility is great, but changing the goalposts isn't a healthy habit, another official said.
Saudi Arabia appears no closer to winning the war against Houthi rebels in Yemen, which has proven to be an excessively expensive exercise in power and so far showed no results.
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