RIYADH: After the cabinet approved a proposal to tax undeveloped land in urban areas, Saudi Arabian real estate shares tumbled. Some analysts have estimated 40 or even 50 per cent of space inside big cities such as Riyadh, Jeddah and Dammam is undeveloped.
Much urban land in the kingdom is owned by wealthy individuals or companies who prefer holding it as a store of value, or trading it for speculative profits, to the process of developing it.
The decision aims to change that pattern by pushing more land out into the market, where it can be developed. The tax is politically sensitive because it may hurt the interests of influential people. But a lack of affordable housing has become a major social problem in the kingdom, and the tax could make more land available for home building.
It was the first big economic policy initiative since King Salman took the throne in January. The cabinet gave no details of the likely size of the tax, how it would be implemented, or a timetable for introducing it. An economic council will make proposals to the Shura Council, a top advisory body.
