RIYADH: A new tax on unused land could result in prices dropping as much as 40 per cent outside of Saudi Arabia’s main cities, according to reports. Under the approved regulations announced earlier this month, owners of empty plots of urban land designated for housing or offices in towns and cities have to pay a tax of 2.5 per cent of the value of the land each year. Arab News cites a local publication as saying the new legislation would also increase investment in the property sector and lead to major development over the next two years.
It quoted Makkah Chamber of Commerce and Industry’s real estate committee chairman Mansour Abu Riyash as saying the tax could see prices drop as much as 20 to 40 per cent over the next two years and boost the market for the next three years. The official estimated as much as 40 per cent of land in some major cities was not being used, which could lead to SAR 30bn of returns if developed.
Furthermore Jeddah Chamber of Commerce’s real estate committee chairman Khalid Al-Ghamdi was quoted as saying fees would boost the sector and bring prices back down to normal levels. Other members of the chamber were quoted as saying it would reduce monopolies and force owners to develop, sell or pay fees, leading to price drops of around 30 per cent. GL.L. Company head Jamil Ghanzawi was also quoted as saying the new tax would encourage the development of housing needed for middle class families in the kingdom and the funds collected could be used to build more homes.
