RIYADH: Saudi Arabia has clamped down on 61 projects that failed to observe off-plan sales regulations, the Ministry of Housing revealed.
The violations were detected during inspection tours by control teams responsible for the Wafi off-plan sales and rent program.
The tours, which covered a number of cities throughout the Kingdom, were conducted as part of the program’s efforts to regulate the off-plan real estate sector in the country.
Head of the off-plan sales and rent committee, Abdul Aziz bin Mohammed Al-Muhaymid, noted the importance of obtaining a license to sell or market off-plan units and urged real estate establishments to abide by the licensing controls and regulations.
“Some of the violations that were detected concerned the selling and reserving of units, signing contracts with buyers, and receiving advance payments for financial projects under construction,” he said.
Al-Muhaymid pointed out that Wafi teams would continue to carry out inspections throughout Saudi Arabia and any violators would be referred to the Public Prosecution with a view to facing possible legal action.
Arab News recently reported that off-plan property sales represented a growing sector of the Saudi real estate market, but that some consumers were still wary of developers’ abilities to deliver quality homes on time.
According to real estate consultancy company, Knight Frank, off-plan units represent around 9 percent of the total existing housing stock, but a massive 60 percent of total future supply in the Kingdom.
The firm questioned 1,000 Saudi nationals for its national housing survey of the country for 2020. Asked how likely they were to buy an off-plan property, 26 percent said very, 37 percent fairly, 14 percent not very, and 13 percent said not at all.
“As the residential market sees more institutional developers enter the market and with regulations being enacted to protect buyers, such as the Wafi program, there will be greater levels of confidence in buying off-plan going forward,” Taimur Khan, an associate partner at Knight Frank, told Arab News.
Of those who said they were unlikely to buy an off-plan property, 45 percent indicated that the reason was due to a lack of trust in developers over quality, while 19 percent said they were not confident that the unit would be delivered on time.
With the government aiming to increase homeownership in the Kingdom to 70 percent by 2030, from 50 percent in 2018, off-plan may soon become more commonplace. But those looking to take advantage of the sector have been warned to get their paperwork in place first.