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MENAFN - Arab News - 20/01/2013

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(MENAFN - Arab News) Every city and town in the Kingdom is grappling with the housing problem. It is beyond the means of an ordinary citizen to buy a plot or house while speculators and investors dominate the sector. The property situation in Makkah is further complicated.

Prices have reached exponential levels and the market is ridden with unforeseeable risks. The price rise has affected not only the Central Zone surrounding the Grand Mosque but reached the fringes of the city, Al-Madinah daily reported yesterday.

"Now massive investment activities have spread to all streets and roads and even to the city suburbs including the third and fourth ring roads," said Al-Shareef Mansour Abu Rayyash, chairman of the Real Estate Committee at the Makkah Chamber of Commerce and Industry (MCCI).

Abu Rayyash blamed the municipality for not providing a congenial environment for the healthy growth of the real estate industry.

"The Makkah Municipality should take immediate steps to simplify the issue of construction licenses and lay down clear guidelines and specifications for buildings. Instead of simplifying its procedures, the municipality takes more than a year to register a property document. No municipal official can deny this fact," he said.

He added that the real estate industry in Makkah has reached such proportions that 50 percent of the real estate portfolios in the Kingdom are dominated by Makkah properties. He said real estate activities in Makkah would increase in future but without any official incentive or encouragement to help the investors.

Mustafa Rida, a member of the Real Estate Committee in the MCCI, slammed the municipality for lack of coordination in implementing projects causing a lot of hardships for the real estate industry.

Lack of coordination while implementing various projects of the municipality and of different departments has led to rise in property prices and also the aggravation of the housing crisis, he said.

He recommended that there should be a coordination committee in the municipality that regularly monitored the implementation of projects.

He said lack of coordination had led to failure of millions of riyals' worth of projects, which deprived jobs for citizens and delayed economic progress.
He blamed the municipality for the long delay in issuing building permits.

"Lack of transparency of future municipal plans posed a threat to real estate activities. A man invests a lot of capital to construct a building and only later he learns that there is a municipal project at the same spot and the building has to be demolished," he said.

He added that the real estate boom is artificial and a day will come when the unnatural boom would turn into bust.

Muhammad Malibari, deputy chairman of the Real Estate Committee at the MCCI, compared the real estate business in the city to a moving target which is difficult to hit because of poor planning. He said the speed at which land prices went up was astounding.

Malibari said the demolition of 25,000 properties for the five-year expansion projects in Makkah was a major factor that triggered the rapid rise in prices. Another problem that baffled investors was the inordinate delay in the registration of title deeds in the municipal records.

By the time the registration completed the value of properties would have shot up. The victims of such delay are not only large investors but even owners of small plots.

A man whose property is expropriated or sold for a project would have to wait such a long time for the completion of official formalities that the cash he got as compensation would no more suffice to buy a new house because of the rapid rise in prices.

He said the real estate situation in Makkah is in total chaos. "We do not know through where the proposed railway and metro tracks would pass or the site for the construction of other railway facilities. If only the businessmen and investors had specific information in advance about such locations they would be able to develop such locations, he said.

 






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