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Saudi Govt Introduces New Exemptions to Boost Real Estate Sector

Supporting the real estate and residential sector is an important part of Saudi Vision 2030. (Photo: AFP)
Supporting the real estate and residential sector is an important part of Saudi Vision 2030. (Photo: AFP)
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Saudi Govt Introduces New Exemptions to Boost Real Estate Sector

Supporting the real estate and residential sector is an important part of Saudi Vision 2030. (Photo: AFP)
Supporting the real estate and residential sector is an important part of Saudi Vision 2030. (Photo: AFP)

Saudi Arabia has given new impetus to real estate activities in the country by exempting real estate transactions from a 15% value-added tax and instead imposing a new 5% tax on property deals.

These decisions came in accordance with a royal order issued by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz on Friday, in a move aimed at protecting the growth in the real estate sector and revitalizing the economy.

In remarks, Saudi Finance Minister Mohammed Al-Jadaan said that this move was intended to help stimulate economic growth and provide support to Saudi citizens.

Supporting the real estate and residential sector is an important part of Saudi Vision 2030, Al-Jadaan said. It contributes significantly to the development of the country’s economy by strengthening the partnership with the private sector, real estate developers, and finance companies, he added.

The minister explained that the royal order was aimed to “support citizens, ease their burden and enable them to own homes, and helps develop the Kingdom’s economy by spurring the residential and commercial property sector.”

For his part, Minister of Housing Majid al-Hogail said the move would help achieve a target of boosting housing ownership by Saudis to 70 percent by 2030.

The royal order said the government would bear the cost of the new Real Estate Transaction Tax “for up to 1 million riyals” for Saudi citizens purchasing their first home.

Real estate developer and head of the Real Estate and Urban Development Committee in the Eastern Province Chamber in Saudi Arabia, Hamid bin Hamri, underlined the importance of this step in supporting the economy and the real estate market, noting that the government was seeking to regulate one of the largest streams of the economy, which is the real estate sector.

In remarks to Asharq Al-Awsat, he said: “The decision contributes to regulating real estate developers. Individual developers, who represent a large proportion of the market, will work to transform into companies with a legal framework to benefit from the decision, which would boost professionalism in the real estate development sector in Saudi Arabia.”

Hossam Al-Saad, CEO of a major real estate marketing company, said that the decision came to maintain the pace of development in the housing and real estate sector.

He added that Saudi Arabia was moving towards a clear target to achieve housing ownership to 70 percent by 2030.

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World Bank Warns that US Tariffs Could Reduce Global Growth Outlook

WASHINGTON, DC - JANUARY 16: Workers build risers in Freedom Plaza ahead of the Inauguration on January 16, 2025 in Washington, DC. US President-elect Donald Trump and Vice President-elect former Sen. JD Vance (R-OH) will be sworn in on January 20. Kayla Bartkowski/Getty Images/AFP
WASHINGTON, DC - JANUARY 16: Workers build risers in Freedom Plaza ahead of the Inauguration on January 16, 2025 in Washington, DC. US President-elect Donald Trump and Vice President-elect former Sen. JD Vance (R-OH) will be sworn in on January 20. Kayla Bartkowski/Getty Images/AFP
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World Bank Warns that US Tariffs Could Reduce Global Growth Outlook

WASHINGTON, DC - JANUARY 16: Workers build risers in Freedom Plaza ahead of the Inauguration on January 16, 2025 in Washington, DC. US President-elect Donald Trump and Vice President-elect former Sen. JD Vance (R-OH) will be sworn in on January 20. Kayla Bartkowski/Getty Images/AFP
WASHINGTON, DC - JANUARY 16: Workers build risers in Freedom Plaza ahead of the Inauguration on January 16, 2025 in Washington, DC. US President-elect Donald Trump and Vice President-elect former Sen. JD Vance (R-OH) will be sworn in on January 20. Kayla Bartkowski/Getty Images/AFP

The World Bank on Thursday warned that US across-the-board tariffs of 10% could reduce already lackluster global economic growth of 2.7% in 2025 by 0.3 percentage point if America's trading partners retaliate with tariffs of their own.
Such tariffs, promised by US President-elect Donald Trump, could cut US growth - forecast to reach 2.3% in 2025 - by 0.9% if retaliatory measures are imposed, the bank said, citing economic simulations. But it noted that US growth could also increase by 0.4 percentage point in 2026 if US tax cuts were extended, it said, with only small global spillovers.
Trump, who takes office Monday, has proposed a 10% tariff on global imports, a 25% punitive duty on imports from Canada and Mexico until they clamp down on drugs and migrants crossing borders into the US, and a 60% tariff on Chinese goods.
The World Bank's latest Global Economic Prospect report, issued twice yearly, forecast flat global economic growth of 2.7% in 2025 and 2026, the same as in 2024, and warned that developing economies now faced their weakest long-term growth outlook since 2000, Reuters said.
The multilateral development bank said foreign direct investment into developing economies was now about half the level seen in the early 2000s and global trade restrictions were five times higher than the 2010-2019 average.
It said growth in developing countries is expected to reach 4% in 2025 and 2026, well below pre-pandemic estimates due to high debt burdens, weak investment and sluggish productivity growth, along with rising costs of climate change.
Overall output in emerging markets and development economies was expected to remain more than 5% below its pre-pandemic trend by 2026, due to the pandemic and subsequent shocks, it said.
"The next 25 years will be a tougher slog for developing economies than the last 25," World Bank chief economist Indermit Gil said in a statement, urging countries to adopt domestic reforms to encourage investment and deepen trade relations.
Economic growth in developing countries dropped from nearly 6% in the 2000s to 5.1% in the 2010s and was averaging about 3.5% in the 2020s, the bank said.
It said the gap between rich and poor countries was also widening, with average per capita growth rates in developing countries, excluding China and India, averaging half a percentage point below those in wealth economies since 2014.
The somber outlook echoed comments made last week by the managing director of the International Monetary Fund, Kristalina Georgieva, ahead of the global lender's own new forecast, to be released on Friday.
"Over the next two years, developing economies could face serious headwinds," the World Bank report said.
"High global policy uncertainty could undercut investor confidence and constrain financing flows. Rising trade tensions could reduce global growth. Persistent inflation could delay expected cuts in interest rates."
The World Bank said it saw more downside risks for the global economy, citing a surge in trade-distorting measures implemented mainly by advanced economies and uncertainty about future policies that was dampening investment and growth.
Global trade in goods and services, which expanded by 2.7% in 2024, is expected to reach an average of about 3.1% in 2025-2026, but to remain below pre-pandemic averages.