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Saudi Arabia Introduces New System for Selling and Renting Off-Plan Real Estate Projects
Saudi Arabia Introduces New System for Selling and Renting Off-Plan Real Estate Projects

Saudi Arabia has introduced a new system for the sale and rental of off-plan Real Estate projects in the Kingdom.

The new system helps safeguard the funds of buyers, sellers, and investors and was approved by The Council of Ministers.

Developers must also be registered in the Developer’s register to be able to engage in the sale and rental of off-plan projects and complete projects within specified deadlines.

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Understanding Off-Plan Real Estate Projects

Image Credit Masar Makkah

Off-plan real estate refers to properties available for purchase or rent before their construction has been completed. This concept has been gaining popularity globally due to the potential for higher returns and the ability to customize the property according to the buyer’s preferences.

In Saudi Arabia, the new system for off-plan real estate projects will regulate selling and renting these properties by ensuring that funds collected from buyers, renters, or project financiers are protected and utilized correctly. 

This move aims to create a sense of security and trust in off-plan real estate transactions.

Overview of the New System

The new system has outlined several rules and regulations for off-plan real estate projects. The provisions apply to private developers and projects affiliated with government entities, making the new system all-encompassing.

Registration in the Developer’s Register

Image Credit Dar Al Arkan

One of the key provisions of the new system mandates that any real estate developer wishing to engage in the sale and rental of off-plan real estate projects must be registered in the Developer’s Register. 

This measure ensures that only authorized developers can participate in the off-plan real estate market, providing a layer of security for buyers and renters.

Obtaining a Special License for Projects

In addition to registration, developers must secure a special license for each off-plan project. A competent authority grants the license, and developers must apply for it before commencing any sales or rental activities. 

The provision extends to advertising these projects in local or foreign media or organizing exhibitions and invitations.

Commencement and Completion of Construction

Once the special license has been obtained, developers must begin construction within six months. The project must be completed within the specified deadline, ensuring buyers and renters can take possession of their properties on time.

Compensation for Delays

In the event of a delay in delivering the land or residential unit without a justifiable reason, the new system provides for predetermined compensation. 

Buyers are entitled to this compensation for developed land or equivalent rent for residential units, serving as a deterrent for developers to delay project completion.

Handling Unforeseen Circumstances

The new system acknowledges that circumstances beyond control may sometimes hinder the completion of a licensed real estate project. 

In such situations, the competent authority, in consultation with the project’s legal accountant and consulting office, will take necessary measures to ensure the project is either completed or liquidated. If the project is liquidated, the amounts paid for it will be refunded, as determined by the regulation.

Regulations for Developers and Landowners

Image Credit Saudi NHC

Developers and landowners are prohibited from disposing of the shared part of the licensed project before the division of real estate units. Any disposals after division must comply with the system for ownership, division, and management of real estate units. 

This rule safeguards the interests of all parties involved and ensures fair practices.

Penalties for Violations

The new system is stringent about violations and non-compliance. Developers engaging in selling and renting off-plan real estate projects without a license or presenting false documents or information for licensing can face severe penalties. 

Misappropriation, dissipation, or wrongful use of funds intended for project establishment, failure to deposit funds in an escrow account, and legal accountants and consultants verifying false documents are also considered violations. 

Penalties include imprisonment of up to 5 years, fines of up to SAR 10 million, or both, depending on the severity of the violation.

Real Estate Projects in Saudi Arabia

Image Credit Saudi NHC

Saudi Arabia is witnessing a period of rapid urban growth. The construction projects currently underway in the country reflect the nation’s commitment to sustainable urban development and providing high-quality housing and infrastructure.

Image Credit NEOM

Additionally, Saudi Arabia’s real estate and infrastructure projects have been announced to be valued at over $1.25 trillion since 2016, with key giga projects including NEOM and the Red Sea Global

ROSHN Group is Saudi Arabia’s most trusted multi-asset class real estate developer and a giga-project wholly owned by the Kingdom’s Public Investment Fund (PIF). ROSHN is working to support the government’s goal of achieving a 70% homeownership rate by 2030. 

Image Credit Roshn

One of its notable projects is the Marafy Project in Jeddah which includes an 11km Artificial Canal. It aims to develop integrated neighborhoods and contribute to the growth and development of the Jeddah region.

Image Credit Dar Al Arkan

Moreover, The first Elie Saab Branded Residences have been launched in Riyadh. Dar Al Arkan, a leading Saudi real estate company, has launched Etoile by Elie Saab in the SEDRA, part of the ROSHN group, community in northern Riyadh, located close to King Khalid International Airport.

Image Credit Saudi NHC

Additionally, Saudi Arabia’s National Housing Company has launched 757 new residential units in Jeddah across Two Projects, Med Sadeem and Khayal Hostel, featuring villas, townhouses, and apartments with modern amenities. 

Both projects are being implemented under the National Housing Company’s Public Private Partnership scheme taking their total new residential projects this year to 46.

Masar Makkah Residential Towers

Image Credit Masar Makkah

Umm Al Qura, the proprietors and creators of the recently envisioned Masar Destination in Holy Makkah, have recently entered into a contractual agreement with Scope Properties. 

The aim is to develop a project known as Masar Destination which will feature 24,000 hotel rooms, and the collaboration with Scope Properties involves an investment of $240 million for the construction of residential towers in Makkah City.

Image Credit Masar Makkah

The residential towers would be the centerpiece of the development, reflecting the ambitious vision of Masar Destination. With an investment of SAR900 million ($240 million), these towers will significantly contribute to the urban landscape of Makkah. 

The project promises to offer residents a unique living experience, combining modern amenities with the spiritual ambiance of the holy city.

Image Credit Saudi NHC

The National Housing Company (NHC), founded in 2016 under Royal Decree No. 7262, is the investment arm of Saudi Arabia’s Ministry of Municipal and Rural Affairs and Housing. It focuses on the real estate and residential sectors. 

In line with the Vision 2030 initiative, the largest Arab economy has embarked on a sprawling journey to reshape its real estate and infrastructure sectors. 

A Secure Real Estate Sector

Image Credit Vision 2030

Introducing this new system is a testament to Saudi Arabia’s commitment to fostering a transparent and secure real estate sector. By regulating off-plan real estate sales and rentals, the nation is protecting the rights of buyers, renters, and financiers. 

As Saudi Arabia continues to progress and innovate, it remains a beacon of growth and achievement in the Middle East.

Keep Reading: Saudi Real Estate Projects Worth $17.3 Billion Unveiled at Cityscape Global 2023

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