Saudi Gazette report
RIYADH — Many real estate agents have called on authorities to regulate the activities of real estate offices and put an end to unreasonable increases in rent.
They said unlicensed real estate offices are mainly responsible for the hikes.
Some offices raise rent prices unreasonably and this in itself disrupts the stability of the real estate market because it makes potential tenants think twice before paying hefty rents.
“Last year, the market remained stagnant for a few months and demand for real estate slumped because tenants couldn’t afford to pay high rents,” real estate investor Ahmad Al-Salim told Al-Eqtisadiah newspaper.
Many real estate offices do not comply with the Ministry of Commerce and Industry’s real estate agency regulations, which stipulate that rent prices should not be hiked to an unreasonable level, Al-Salim said.
He attributes such violations to the fact that there are around 4,000 real estate offices in Riyadh alone. Some of them do not have a proper license to engage in this business, yet they continue to operate and increase rent prices, he pointed out.
Al-Salim called on the authorities to monitor the work of these offices and prevent them from violating real estate regulations.
Right now, it is not clear where the market is heading, he said. This uncertainty holds many investment companies back from investing in this field, he added.
“So far, no new real estate regulations have been issued and no one knows anything about the Ministry of Housing’s new policies regarding the regulation of the real estate market.”
Muhammad Al-Moneef, another investor, said many tenants no longer trust real estate offices when it comes to searching for property to let because of exorbitantly high rents.
He encouraged tenants to only go to licensed offices to ensure that they find reasonable offers.
Al-Moneef predicted that rent prices would decrease once new real estate regulations have been put in place.
Rents for residential units are expected to decrease as well if the Real Estate Fund offers more loans to citizens and the Housing Ministry embarks on more housing projects.
A report on property rent by the Central Department of Statistics and Information (CDSI) revealed that Riyadh recorded the highest inflation rate for rents, increasing by 156.8 percent between 2007 and 2012.
Dammam came second with 143.3 percent, Hail third with 94 percent, Tabuk fourth with 22 percent and Arar fifth with 23 percent, the report noted.