• Real estate market activity decreased 9.4% for the second consecutive week


    The significant decline in the local real estate market activity continued for the second week in a row, registering a weekly decline of 9.4 percent, compared to its previous record weekly decline of 83.8 percent, to settle the total value of the weekly market deals at below the level of 1.6 billion riyals, compared to its level during The previous week was below 1.8 billion riyals. As already mentioned in the folds of the real estate report for the past week, the real estate market has been subjected with great influence to the effects of the start of applying the new percentage of the basic value-added tax, which began working from the beginning of this month, and that this effect will continue during the current period for several weeks or months to come, in At the same time, during which the market activity will witness a gradual improvement in its performance levels week by week, and that improvement is accompanied by more price discounts, aimed at absorbing the impact of the increase in value-added tax, which will help to restore and attract customers and consumers alike.​

    Looking at the weekly performance at the level of the two main sectors of the market represented by the residential and commercial sectors, the biggest impact of the commercial sector is shown by the increase in value-added tax compared to the residential sector, which recorded a record decrease for the second week in a row of 25.7%, compared to its biggest decrease during the previous week by 88.9 In percent, it is stable at the end of the week at a very low level of the value of real estate deals, only 330 million riyals, compared to its previous weekly level of 445 million riyals. On the other hand, the value of residential sector deals recorded a decrease for the second week in a row by 3.9 percent, compared to its previous record weekly decline of 80.8 percent, to settle at the end of last week at a level below 1.27 billion riyals, compared to the level of the value of its previous weekly deals higher than the level 1.3 billion riyals.

    In addition to other indicators of the weekly performance of the local real estate market, the number of real estate deals during the past week increased by 5.5 percent, compared to its previous record decline of 65.6 percent, to settle the number at the end of the week at a level below 4.5 thousand real estate deals. The number of properties sold last week increased by 6.0 percent, compared to a record decrease during the previous week by 67.3 percent, to settle at the end of the week at a level below 4.6 thousand sold properties. While for the second week in a row, the total area of ​​real estate transactions executed decreased by 19.1%, compared to its record decline during the previous week, 66.9%, to settle at 16.9 million square meters.​

    The positive effects of the decline of speculation on land

    The discussion focuses on the strong impact of the value-added tax existing during the current period, and is expected to continue in the coming period specifically on speculation operations on lands, which during the past years have played a large role in the steady rise in prices of land and real estate, taking advantage of the high demand for housing, and high levels of liquidity Local, and above all, the absence of any costs or regulatory determinants that limit the spread of speculation on one of the most important components and factors of development and production in the national economy, "the land", according to the current reality of the new rate of tax, which speculators collided with on land, and dealers installed their trade in recycling in The real estate market, which led to a significant increase in the cost of these operations and the risks associated with it on the shoulders of speculators, it is hoped that the very harmful effects caused by these speculative selling practices on the market and the economy, and the resulting inflationary waves of land prices and real estate assets of various types, will diminish with it. The new reality of real estate market activity leads to a significant contraction in the size of speculation on land, and its impact has weakened the largest buffer To nurture price inflation, transform the real estate market into a better region that fosters economic growth and meets the development needs of individuals and families of society, quite the opposite of what has been the case in past decades​​.

    And the matter will not stop at this point alone. In the current stage, which witnesses many other variables, which will come as factors that exert pressure on inflated prices, they will in turn be added to the factors affecting the aforementioned, starting with the contraction of disposable income for consumer spending by individuals, and the corresponding rise in Expected in the prices of goods and services "inflation", as a direct result of the increase in the basic value-added tax, will lead to a lot of change in consumer spending patterns among individuals and families, to adapt as much as possible to the new living variables, and the expected contraction that follows from inflows into the private sector It will have many economic, financial and social effects, perhaps the most prominent of which is the decrease in the numbers of expatriate workers and the necessity of their families - if any - to leave the country, and the necessity of many establishments to close part of its operating branches, at the same time that the shops market, exhibitions and commercial sites are witnessed Excess in supply, all of these factors will naturally lead to a decrease in rental returns, both residential and commercial, and its subsequent impact on the inflated prices of the Zhai and residential and commercial real estate, and its continuation until it reaches the fair price levels appropriate for the fixed income of individuals and families.

    Changes in the average market prices of residential real estate​

    The continued escalation in the volume of pressures on the current price levels of various types of residential real estate has resulted in "lands, villas, apartments" - especially since the second half of March, due to the repercussions resulting from the spread of the global pandemic of the Coronavirus, and its momentum was finally derived from the effects of the start The application of the new tax, as confirmed by the comparison of its current levels with the same period of last year - to the discrepancy between slowing growth in prices or decreasing at a greater rate, according to the latest data issued by the Ministry of Justice, where the average price per square meter of residential land recorded an annual decrease of 13.7 in The average price of a residential apartment also recorded an annual decrease of 12.3%, while the annual growth in the average price of a residential villa slowed to 5.8%​.

© All Rights Reserved for Asharqia Chamber