RIYADH, March 7 Saudi Arabia's Ministry of
Housing has set up a 98 million riyal ($26 million) partnership
with a private developer to build 462 housing units in the east
of the capital, it said on Tuesday.
It is the ministry's first public-private partnership and
could become a model for the kingdom's home construction plans,
which aim to make home ownership more accessible for Saudis.
The government is struggling to meet demand for homes for
its young and growing population of 21 million nationals, while
also cutting back on its traditionally generous public spending
after a sharp fall in oil prices since 2014.
The ministry will hold 13.63 percent in the new venture with
Al-Tahaluf Real Estate Company, which is jointly owned by Saudi
Arabia's Hamad bin Mohammad bin Saedan Real Estate Investment
Group and U.S.-based Hovnanian Enterprises Inc.
The project involves building 426 duplex units and 36 single
home villas priced between 530,000 and 590,000 riyals
($141,000-$157,000). Design is by the Netherlands' Studio Piet
The ministry plans to issue tenders for 100,000 units in
2017 as part of its housing initiative, Naif Abdulmouhsin
Al-Rasheed, an adviser to the minister, told Reuters.
The government said in June it aimed to raise the proportion
of Saudis owning homes by 5 percentage points to 52 percent by
2020 and outlined plans to attract foreign and local developers
to build 1.5 million units over the next seven or eight years.
Since then, officials have introduced other reforms,
including a tax on undeveloped urban land, new national home
financing and refinancing companies and an increase in the share
of funding banks can offer for loans purchases.
The government has also signed memoranda of understanding
with China, South Korea and a Saudi-South Korean consortium to
cooperate in building hundreds of thousands of homes in al-Ahsa
and northern Riyadh.
($1 = 3.7503 riyals)
(Reporting by Katie Paul; Editing by Edmund Blair)