The impact of new reforms


Al-Hayat newspaper

I had never seen a shop in Taif’s Central Mall with a “for rent” sign, although from time to time there might be one with a “for sublet” sign. However, when I recently visited the mall, I noticed that they had put up some “for rent” signs. I noticed the same thing in Riyadh where it used to be extremely difficult to find a store for rent, let alone for subletting.

This means that Saudization and the crackdown on violators of residency regulations, coupled with the new fees on expatriate workers are having an impact on the renting of shops. Renting shops is good business for real estate owners who do not have to spend money on maintenance and renovation if the tenant leaves. The new tenant will take care of that, as each tenant will want to adapt the premises to suit this brand and needs. It was rare in the past to see a vacant store. It was also rare to find one for rent, especially in the capital. Today, we see “for rent” and “for sublet” signs on stores and buildings everywhere.

While it is true that real estate owners have been negatively affected by the new reforms, there is no doubt that these reforms are essential. Although there are disadvantages to these reforms, there are more advantages in my view.

The Minister of Labor and labor officials met with opinion writers a few weeks ago to discuss this issue. Officials said the number of retail outlets in the Kingdom is almost double the stores in Egypt and triple the stores in Europe, which means that there are a huge number of stores in the Kingdom. This large number has had a negative impact on the demographics of many neighborhoods and on public consumption and purchase habits. More importantly, most of them are operated through tasattur, whereby Saudis permit foreigners to manage businesses in their names in return for a share of the profits. Yes, many stores have shut down but those that do still operate do so through tasattur.

The Kingdom continues to implement reforms to end many of the negative practices that have become prevalent in the labor market. The new reforms will undoubtedly help reduce the rental of shops and regulate the labor market better to give Saudi youth more opportunities to start their own businesses.