It has been announced that the world’s largest Arab economy and oil exporter must build 1.65 million new homes by 2015 in order to meet supply demands by its constantly growing population.
Saudi Arabia has a population which has doubled since 1988 and has quadrupled over the last 40 years. Each year the population grows by an average of 2%. Currently the population stands at 25.7 million people; the population has grown significantly with the number of younger citizens and 7.7 million of these are aged under 15 years old and two-thirds of the population are under the age of 30 years. On top of this has been an influx of expat workers to the country, which now stands at 5.5 million people.
As a result of this larger younger population $155 billion will be spent on infrastructure covering housing, healthcare and educational facilities over the next 10 years. The construction sector is expected to grow by 4% and it is believed that the country will be able to meet its infrastructure needs as it currently stands as having the lowest public debt levels in the world following the Global Financial Crisis.
Saudi Arabia has the largest property market within the entire Gulf Cooperation Council (GCC) which covers the Arabian Peninsula; this accounts for countries such as Kuwait, Bahrain, Qatar, United Arab Emirates, the Republic of Yemen and the Sultanate of Oman. However, whilst it is in a good position to achieve its infrastructure goals, affordable housing within such a big property market is a key factor in these plans as the current average wages are not enough to support a mortgage, particularly given the larger number of younger people who make up the population.
Last week the Saudi Arabian King, King Abdullah offered the second stage of a two-stage socio-economic handout phase; this included $93 billion of which $66.7 billion is set aside to be spent on developing 500,000 new affordable homes.
The two-tier socio-economic funding is said to also provide a means of creating approximately 150,000 jobs as the current out of work population stands at 450,000 people.
Included in the infrastructure development plans will be the construction of another 600 schools on top of the 3,200 currently being built and 120 hospitals after the healthcare sector received $18 billion in funding for construction starts.