Increased Transparency in the Rental Market

Khaled Al-Rubaish, director of economic editing for the Saudi newspaper Al-Riyadh and a real estate expert, said the Kingdom’s rent index is one of the products of the Ejar system, or commercial units dedicated to property.

In an interview with Al Arabiya, he added that the goal of the Ejar platform is to increase the transparency of the market in terms of transactions, the total number of transactions and their value, as well as to preserve the rights of the lessee, landlord, or intermediary between them, as well as a system for realtors, which began to operate a month ago, and all these factors are aimed at regulating the rental market and at the same time stimulating investment in this aspect, and not everyone who lives looking for an apartment in the property, whether they are residents or Saudis.

A Good and Organized Rental Market

He stressed the need for a good and organized rental market that could meet local and overseas demand and increase investment in the area, whether inside or outside the Kingdom, especially since most transactions tracked by the rental index in July were in large cities, especially in Riyadh, which accounts for 35% and more than 40% of the entire non-oil economy of the Kingdom, and this is due to several reasons for the transactions.

Roll Out of Rent Index

Al-Rubaish said the rent index began to be rolled out after the establishment of the rent system and the rules governing it to protect the rights of all parties, and work on it began in stages in large cities and then in smaller cities, and now it covers 160 cities of Saudi Arabia, and certainly it has not yet covered all the cities and villages of the Kingdom for a number of reasons, including real estate brokers, as some of them may not be ready to enter the electronic network, and this issue is very important for regulation market and it’s recently started and it can’t be compared one year to another because this app started late and so comparisons can’t be done two months later, like July 2022 with July 2023 and the comparison was between July and June of that year, growth exceeded 16%.

He pointed out two important points in the rent index, the first is the increase in value and the second is the increase in quantity, and this reflects that the increase in rental demand is the result of a decrease in ownership due to an increase in interest on property loans, as well as rising prices, which encourages many Saudi families, especially small ones, to rent, and then the rise is normal.

He stated that the reasons for the growth of the rental index are due to domestic demand for population growth, especially in large cities, and one of the most important reasons is that usually small families begin their formation with marriage in the summer, and then, naturally, we observe an increase in the number and value of transactions, especially in Riyadh, which accounts for 21% of the total number of transactions.

Regarding the second question, these are requests from non-Saudis, whether residents or foreign companies that are currently operating, to move to Riyadh, in particular after organizing the transfer of the regional centers of large companies. The third question is the transfer of some companies and banks to their main centers, whether in the eastern region or Jeddah, in Riyadh.For residential rentals.

He explained that all these indicators, including domestic growth, external demand and movement between cities, contributed to the increase in the index, and he expects the index to grow even more in the coming months.