A new tax on white land approved by the Council of Ministers in Saudi Arabia is expected to create a shift in the kingdom’s real estate market, says a leading property consultant.

Jamil Ghaznawi, country manager of JLL Saudi Arabia said that many land owners will come up with plans and begin development to avoid the additional tax burden by holding undeveloped land, according to the Saudi Gazette.

Others will seek to sell plots to other developers, helping reduce land prices, which have been soaring over the last few years to reach 30 to 50 per cent of the development cost.

He told local media that the new tax will result in a “fundamental change in Saudi Arabia’s real estate market and help stimulate further development to address the severe shortage of middle income housing.”

“Lower land values will make development more financially viable and therefore stimulate additional activity,” Ghaznawi said.

Revenue from the land tax will allow the government to undertake additional housing projects and the Ministry of Housing has already announced a number of major projects targeting the affordable housing sector, he added.

The tax will be imposed in four stages with the first stage focused on taxing all undeveloped land over 10,000 sq. meters within the certified master plans for development.

Source