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Saudi Housing Sector Reduces Real Estate Transactions by 32%

A general view of Riyadh, Saudi Arabia (Asharq Al-Awsat)
A general view of Riyadh, Saudi Arabia (Asharq Al-Awsat)
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Saudi Housing Sector Reduces Real Estate Transactions by 32%

A general view of Riyadh, Saudi Arabia (Asharq Al-Awsat)
A general view of Riyadh, Saudi Arabia (Asharq Al-Awsat)

The value of real estate transactions in Saudi Arabia has declined by 32% in a week due to the contraction in the housing sector, which has been significantly affected by the record drop in land and villa transaction values.

This has led to a decrease in transaction values to historically low levels, driven by the persistently high mortgage interest rates.

The Saudi real estate stock market index remained stable at 10,014 points last week, keeping the total value of real estate transactions at SAR 5 billion (approximately $1.3 billion).

This resulted in a 6.9% decrease in the overall number of real estate transactions to 5,100 transactions.

In an interview with Asharq Al-Awsat, Ahmed Al-Drees, the general manager at “Al-Mustaqbal” real estate construction company, pointed out that the main aim is to lower prices to make them more accessible to everyone.

The market has recently seen a slight decline in prices, which may be a precursor to a more substantial market downturn.
The cumulative decrease in transaction values will lead to price reductions, especially for investors looking to exit the market or those whose financial capacity has been affected by the recession, particularly those tied to previous financing contracts or facilities.

Al-Drees also believes that mortgage loans are no longer beneficial in the face of rising interest rates, emphasizing that the essence of the problem lies in the excessive increase in property values beyond the reach of a significant portion of aspiring property owners.

This is evident in the noticeable decrease in launching advanced real estate projects, which have significantly declined due to the market conditions.

Al-Drees pointed out that current real estate marketing campaigns are more focused on selling existing properties rather than launching new projects.

Over the past decade, the total market value of traded properties has reached approximately SAR 1.43 trillion (approximately $381 billion).

Within the local real estate market activity, the overall weekly value of real estate transactions has witnessed a 32% decline, influenced by the downturn in all major market sectors, particularly the housing sector.

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Business

Oil Prices Steady as Markets Weigh Demand against US Inventories

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Prices Steady as Markets Weigh Demand against US Inventories

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices were little changed on Thursday as investors weighed firm winter fuel demand expectations against large US fuel inventories and macroeconomic concerns.

Brent crude futures were down 3 cents at $76.13 a barrel by 1003 GMT. US West Texas Intermediate crude futures dipped 10 cents to $73.22.

Both benchmarks fell more than 1% on Wednesday as a stronger dollar and a bigger than expected rise in US fuel stockpiles pressured prices.

"The oil market is still grappling with opposite forces - seasonal demand to support the bulls and macro data that supports a stronger US dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further," said OANDA senior market analyst Kelvin Wong.

JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day (bpd) year on year to 101.4 million bpd, primarily driven by increased use of heating fuels in the Northern Hemisphere.

"Global oil demand is expected to remain strong throughout January, fuelled by colder than normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays," the analysts said.

The market structure in Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time demand is increasing.

The premium of the front-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing.

Nevertheless, official Energy Information Administration (EIA) data showed rising gasoline and distillates stockpiles in the United States last week.

The dollar strengthened further on Thursday, underpinned by rising Treasury yields ahead of US President-elect Donald Trump's entrance into the White House on Jan. 20.

Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55 to $77.95 into February as the market awaits more clarity on Trump's administration policies and fresh fiscal stimulus measures out of China, OANDA's Wong said.