Saudi Arabia: Contagious Price-Hike Fever Grips Landlords

Arab News
JEDDAH, Feb 9: Many landlords have caught the seemingly contagious price-hike fever that has recently affected the market, with some raising rents by thousands of riyals without prior notice.

The sudden increase in rent has affected many people, particularly those with lesser incomes who have had to leave their apartments in search for cheaper accommodation. With the lack of regulations to control price increase, many residents have expressed heir fear toward the unjustified and unpredictable rental increase.

“The additional SR3,000 has really affected my budget and I had to borrow some money to pay my landlord the extra, unjustified increase,” said Mahmoud Al-Saleh, a 35-year-old Saudi.

Like others, Al-Saleh was informed about the increase by his landlord shortly before the rental due date. (It is common in Saudi Arabia to pay three or six months of rent at a time, so short-notice increases can amount to considerable sums.)

“The landlord did not even want to justify the increase or give me a chance till next payment. He put me in a corner,” he said. He said that since he doesn’t work for the government, he has not benefited from the Saudi government’s recent salary increases to its employees. “This general uncontrolled increase in lifestyle is truly frightening,” he said.

Ahmad Al-Ghamdi, a 47-year-old state worker, also said rent increases have hit him hard, even with his recent raise, because his family lives in Makkah and he works in Taif where he keeps a small apartment. “Both landlords announced they were increasing my rents,” he said. “My family lives on a tight budget and this situation has horrifically affected me and my family,” Al-Ghamdi said.

Saeed Al-Othman, a 57-year-old Saudi landlord in Jeddah, said that he was forced to increase the price of rental to cope with inflation, which is expected to grow by more than 6 percent this year. “Every landlord has increased prices, why shouldn’t I?” he said.

Al-Othman said that the cost of the building’s maintenance has increased, which he believed is enough justification to increase the rental by SR2,000 per apartment. Saudi Arabia relies heavily on important goods, including the kinds of items needed to maintain buildings. The Kingdom’s peg to a weak US dollar coupled with it heavily reliance on and demand for imported goods has caused the prices for products to rise sharply.

A weak dollar might benefit US exports to other countries, but countries that peg their currency to the US dollar do not reap the rewards of cheaper US-made goods since their currency is worth the same in relation to the dollar: in Saudi’s case about 3.75 riyals to the dollar regardless of the dollar’s value in relation to other currencies, such as the euro.

“Real estate is currently facing a price increase all over the Kingdom and mostly in Jeddah, which consequently resolved to the increase in rentals especially in new buildings,” said Homoud Naji, real estate office owner. Naji added that landlords who own old buildings should not increase their price because they were not affected with the new high prices of cement and iron. “Without an official regulation, who can stop them?” he said.


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