(MENAFN - Arab News) The Real Estate Development Fund (REDF) has distributed 3,000 plots to citizens in Hail province as part of the government's efforts to ease the housing shortage in the Kingdom.
The REDF implemented the land grant project in collaboration with the Ministry of Municipal and Rural Affairs.
Hail is the first province to benefit from the joint program that was launched two months ago.
The preference in the land grant is given to applicants whose names appeared on a list of people selected for REDF's housing loans. As such, this grant removed the obstacle for a number of citizens who could have been denied their right to build their own homes after receiving REDF loans worth SR 500,000.
The land grant is finalized only after the municipal authorities' approval and only after they ensure that the beneficiary did not get a land grant on an earlier occasion, Al-Eqtisadiah business daily reported yesterday.
The new program is expected to bring down property prices and break the hold of real state businessmen on property prices, according to reports. The program also permits the construction of houses at any location; hence it does not constrain the beneficiary to a land plot decided by the real estate businessmen with vested interests.
Hail Gov. Prince Saud bin Abdul Mohsen had earlier urged the fund managers and the Hail municipality to speed up the land grant process in the province.
The program has also asked 16 mayoralties and 244 smaller municipalities to complete the formalities needed for the land grants and to ensure all the applicants for housing loans are fully qualified for the loan.
Fawaz Al-Shamri, director of the Real Estate Development Fund in Hail, reassured citizens that the land grant project would be effective immediately in Hail, thereby allowing the applicants, whose loans were approved, to commence the construction of their houses as soon as possible.
Economic consultant Abdullah Al-Ajaji said the construction of 500,000 housing units ordered by Custodian of the Two Holy Mosques King Abdullah at a cost of SR 250 billion would help reduce real estate prices and rents.
Another factor that has kept the house prices high is the spiraling land price.
Unemployment among Saudis is also said to be one of the reasons that intensified the country's housing crisis.
According to some studies the housing demand will continue to outstrip supply, requiring SR 500 billion in financing to construct 1.25 million houses by 2014.
Total real estate financing is also forecast to reach SR 60 billion by 2013.
Hasan Al-Yamani, director at the Abdul Latif Jameel Real Estate Installments, said recently that the new mortgage law would have a moderating effect on the Saudi real estate market over the short to medium-term, allowing up to 80 percent of Saudi citizens to become first-time homeowners.