Saudi authorities announced on Thursday a five-year freeze on rent for residential and commercial properties in Riyadh, where demand for housing has soared as the kingdom’s ambitious megaprojects draw workers to the city.
Riyadh, the capital of the Middle East’s largest economy, is home to more than 8.6 million people, nearly half of them foreigners.
Many have converged on the city to work on multi-billion dollar projects as part of the Vision 2030 plan launched by Saudi Crown Prince Mohammed bin Salman, seeking to diversify the country’s economy away from oil.
The General Authority for Statistics reported in August a 7.6 percent year-on-year increase in residential rent prices.
The official Saudi Press Agency (SPA) said the crown prince had issued orders “in response to the challenges the capital has witnessed in recent years regarding rising residential and commercial rents”.
The ensuing cabinet decision and royal decree suspended “the annual increase in the total rent value in residential and commercial property leases… located within the urban area of Riyadh for a period of five years”.
“The landlord may not increase the total rent value of the property agreed upon in existing or new contracts” as of Thursday, it added.
Low-rise buildings and villas make up the majority of housing units in Riyadh, where construction has boomed.
In June, Saudi Minister of Municipal Rural Affairs and Housing Majed bin Abdullah Al-Hogail pointed to the high demand for housing, saying “a city like Riyadh needs between 120,000 and 130,000 housing units annually to enter the market”.
In April, Saudi authorities increased annual fees on undeveloped land in Riyadh to 10 percent of the property’s value, in a bid to encourage residential construction.
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