Amid real estate boom, Makkawis face housing crisis

At a time when Makkah’s real estate sector is witnessing an unprecedented boom, several local residents are up in arms against a growing housing crisis in the holy city. They blame landlords for creating such a situation. Speaking to Arab News, a number of prominent figures and local residents said most landlords prefer leasing their buildings only on a temporary basis so that they can earn huge profits. They can earn bigger margins of revenue through leasing their residential apartments to pilgrims during peak Umrah and Haj seasons instead of receiving low revenue when leasing them permanently to local residents. Eventually, many tenants, especially newly married couples, find it very difficult to secure rented residential apartments on a permanent basis. This new phenomenon has also resulted in a hike of rents and real estate prices by 40 to 70 percent. Many landlords feel leasing residential apartments to Haj and Umrah pilgrims would fetch them huge revenues. For example, each landlord can get an average of SR2,000 for providing accommodation to a Haj pilgrim. This means that he would get a total of SR2 million within one month if he leases a building that can accommodate 1,000 pilgrims. Mansour Abu Riyash, head of the real estate committee at the Makkah Chamber of Commerce and Industry, said Makkah is currently experiencing at least a 20 percent shortfall in housing. He attributed this mainly to the demolition of more than 6,000 residential buildings and real estates to make way for the ongoing expansion of the Grand Mosque and construction of mega real estate projects in the central Haram area. According to Mansour Abu Riyash, there is a need to build at least 200,000 housing units to accommodate the local residents who have been evicted prior to demolition of these buildings. “Most of the real estate investors are concentrated on constructing residential buildings for the accommodation of Haj pilgrims. They want to cash in on the demand for residential buildings during the Haj season and they can earn huge profits by renting out the buildings for the pilgrims for a short period of two months rather than renting out permanently for local residents,” he said. Salem Al-Matrafi, a businessman who has investments in Makkah’s housing sector, said that he is not in a position to blame landlords and real estate investors for giving priority to focusing their investments in the pilgrims’ accommodation sector. “This would help them get huge profits in addition to avoiding recurrent problems with their local tenants,” he said, while admitting that this trend would aggravate the housing crisis in the holy city. “If we set aside about 60 to 70 percent of residential apartments to rent out for Haj pilgrims, and leasing them temporarily to local residents in the lean season, it would aggravate the housing crisis in the holy city,” he said, adding that this could trigger an exodus of Makkawis to outside the city. Al-Matrafi urged the Ministry of Municipal and Rural Affairs to take urgent steps to set up new townships, and allow citizens to build additional upper floors for their residential buildings. Speaking to Arab News, a number of local residents, including Saudis and foreigners, demanded the urgent intervention of the Makkah municipality and concerned authorities to solve the severe housing problem in the city. They suggested the municipality should allow citizens to build residential buildings at its townships. They also called for allowing construction of additional floors for their residential buildings. At present, the municipality gives permission for the construction of only two-story residential buildings with an annex. Hani Maulavi, a Saudi young man who wants to get married, said he found it very difficult to get a permanent residential apartment. “Therefore, I am forced to rent out an apartment on the condition that I would leave it during the Haj season. My actual plan was to rent out an apartment for an annual rent ranging between SR13,000 and SR15,000 but I found that I have to spend at least SR22,000 to get a home with minimum facilities,” he said. Hani, who had been in the United States for 10 years for his education, said this new phenomenon on the part of landlords has dealt a severe blow to young men who have plans to marry and build a family life. “Even if I am able to find a residential apartment at a reasonable rent, I have to quit it prior to the Haj season. This means that I have to rent out another residential apartment for a three-month period and shift all my household items, including furniture and utensils, to the new house,” he said. Awad Al-Jomai, a psychologist and family specialist, said the new tendency on the part of landlords to lease residential apartments on a temporary basis has dashed the marriage plans of several youngsters. “Many young men found it very difficult to have rented houses on a permanent basis. This phenomenon has resulted in bringing down the number of marriages taking place in the holy city,” he said. According to Al-Jomai, many young couples live in residential units that are not up to their expectations. “They choose such houses that lack some facilities only because they can live there on a permanent basis. At the same time, some newly married couples are forced to live at their original homes together with parents and other family members,” he said, adding this most often result in family disputes. “I would not blame young married couples who prefer living with their families. Otherwise, youngsters have to delay their marriages for a long time given the housing situation,” he said. Sami Sindi, a Saudi citizen who seeks a permanent rented housing unit in Makkah, urged the municipality to create more residential townships to solve the housing problem in the city. “There are large numbers of people migrating to Makkah city from the rural areas of Makkah, Jeddah and Taif in search of jobs and earning a livelihood. This has aggravated the housing problem in the city,” he said. Sindi suggested local banks could play a vital role in addressing the housing problem. “Local banks should build residential villages and distribute housing units among Saudi citizens based on a system of renting ending in ownership,” he said. ccording to a recent study carried out by Makkah’s Urban Studies Center, the practice of temporary leasing of residential building is the major reason for the current housing crisis and exorbitant increase in rents. The study noted that several landlords in the districts such as Aziziyah, Al-Rawdah, Al-Adl, Shisha, Kudai, Khalediya, Kaakiya, Nuzha, Salama and Hijrah are leasing their residential buildings on a temporary basis. “They are keen on evicting their tenants during the Haj season to make way for Haj pilgrims as part of agreements reached with Haj missions. This has aggravated the housing problem in addition to a steep hike in rents,” the report said, while noting people with a limited income are the worst victims of this phenomenon. On the other hand, several landlords told Arab News that temporary leasing brings about several advantages for them. First of all, it fetches them more revenue. Secondly, they get enough time to do proper maintenance work and refurbishing of buildings at regular intervals. Ahmad Al-Madeeni, who owns four residential buildings in Makkah, said three of his buildings are located in the central Haram area. “I lease these buildings on a temporary basis due to the huge demand for residential facilities for Haj and Umrah pilgrims after the demolition of thousands of buildings in the area. I set aside one building for leasing to the local residents on a permanent basis,” he said. According to Al-Madeeni, leasing on a temporary basis helped him earn a huge margin of profit. “I can earn 40 percent more revenue than if I lease on a permanent basis,” he said, underlining the significance of pilgrim accommodation in the wake of a growing number of Haj and Umrah pilgrims every year. Commenting on the issue, Saleh Al-Ghamdi, an investor in a residential tower in Makkah, has proposed to develop more residential areas on the outskirts of Makkah as a viable option to address the growing housing crisis in the holy city. “Those who want permanent housing can take advantage of these residential areas. We have to set aside more residential buildings to lease on a temporary basis to accommodate the growing number of pilgrims,” he said, adding this is the ideal solution to solve the housing problem in the wake of the growing number of pilgrims. Al-Ghamdi urged businessmen and real estate investors in the city to implement more residential building projects to accommodate pilgrims as well as to solve the housing problem of local residents.