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Improving Living Environments for the Low-Income Households
Saudi Arabia

Keyword: Homelessness & Housing

Background

Faced with an enormous influx of rural and desert peoples into urban areas and the resultant proliferation of squatter settlements and unplanned houses, the Saudi Government initiated a massive low-income housing programme. Two projects were key to its success. First, the Free Land Plots project provided land grants ranging from 400 to 900 square metres each. In the Riyadh suburb of Oreijah, for example, 30,000 families received free plots. The second key factor was the Real Estate Development Fund's (REDF) extension of Easy Term and Interest-Free Loans to Saudi citizens who owned land plots. In the last 20 years, the REDF gave citizens 425,000 loans with which 510,000 residential units were built at a cost of SR.105,646 billion. Concurrently, loans were given to Saudi investors to build housing compounds with no less than six units each. A total of 2,485 investment loans created 29,500 such units at a cost of SR.5,170 million.


Narrative

For the urban poor, mainly the low-come people, the government launched a serviced land plots programme aimed at providing them free services land plots so that they could build their own dwellings with interest-free loans from the Real Estate Development Fund. In Riyadh alone, 100,000 plots have been given away to the poor in the last ten years.

Apart from public housing projects, several private sector-funded projects were implemented by charitable organizations to provide shelter to the poor and the homeless, particularly in Riyadh and Makkah.

Although the supply of urban housing increased considerably, it fell short of the demand. The over-all shelter situation also calls for rehabilitation and renovation of sub-standard residential areas, which emerged in the wake of rural-urban migration and uncontrolled urban sprawl. Public and private sector's housing, as well as housing programmes of charitable institutions have contributed significantly to the government's housing policy to provide the urban poor with decent, safe and healthy dwellings, thereby developing the urban living environment and improving the economic and social standards of citizens.

Three parties participated in the housing development process namely: Government, the private sector and the citizens themselves. The objective has been to provide decent homes with ammenities to all people with different financial resources.

HOW THE SAUDI GOVERNMENT LAUNCHED THE SHELTER FOR THE POOR PROGRAMME

Over the last three decades, the Saudi cities have been experiencing a great change in their residential structure as a result of the government's multipurpose projects for the development of housing, transportation, health care, educatino, commerce and industry. The main factors that were taken into consideratino in housing development were how best to encounter the socio-economic, cultural, environmental and climatic problems.

In 1970, significant progress was made in the development of institutions to tackle the problems of housing. A General Housing Department was established in 1971 under the Ministry of Finance and National Economy, thereafter it developed to become the Ministry of Housing and Public Works. This department implemented public housing programmes, while the Ministry undertook the programme of:

Designing and constructing low-income households
Selecting recipients of houses
Collecting of payments of interest-free loan repayable over a 25-year period.
Maintenance of public spaces and services of the projects.

HOUSING FINANCE

Generally, housing finance in the Kingdom is provided by:

The Real Estate Development Fund.
The Public Sector represented by the Ministry of Housing and Public Works.
National Banks.
The private sector either with loans from Real Estate Development Fund or without.
Joint-stock companies with funds from both the government and individuals.
Institutions which provide housing for their employees.

The two factors, which played vital roles in providing the poor and low-income group and the public at large with decent homes, are:

I. THE FREE LAND PLOT PROGRAMME, whereby the Government, through municipalities, gave free land plots to needy people and low-income groups to build their homes.

In the last 17 years, 1,200,000 plots, ranging from 400 to 900 square meters each, were given away by municipalities to eligible people in different Saudi cities. Due to this factor and with the help of the second factor (Real Estate Development Fund), new suburbs sprang aound the Saudi cities, with comprehensive services and infrastructure facilities. They contributed to the expansion of the Saudi cities, keeping in mind that most of the lands surrounding them are desert.

This does not include lands on which housing projects were built nor the land distributed by the Ministry of Defence to its military personnel and civilians. Also, the Ministries of Finance and National Economy, Industry and Electricity, and the Government Railway Organization distributed many plots to their own respective employees.

Ain Alazizah Directorate in Makkah province has also granted out of its land thousand of plots to people. If all free land plots were aggregated the total will be in hundreds of thousands.

II REAL ESTATE DEVELOPMENT FUND (REDF):

It was established in 1974 to enable individuals to build their houses and the private sector to invest in housing, REDF was allowed to give loans to individuals to build their own houses or construct large commercial compounds. It is also allowed to enter into agreements with the municipalities to develop new residential areas, and to assist Government institutions in setting up housing projects for their employees. In the last 20 years, the REDF granted 425,000 loans to individuals totalling SR.105,646 billion (US$28,172 billion) for the construction of 510,000 housing units. Loans are repayable in 25 years with no interest. Moreover, 20% of this loan is deducted. The loanee only repays 80% of the loan during the 25 years. Free land distributed to people also assisted in the expansion of Saudi cities, as I said earlier.

During the same period 2485 loans which amounted to SR.5.170 billion (US$1.378 billion) were lent to business to build 29,500 units of apartment buildings and villa compounds. These loans are interest-free and repayable in ten years, but do not, however, get the deduction privilege.

The Government through the Ministry of Housing and Public Works, has built over 25,000 housing units in the cities of Damman, Jeddah, Riyadh. Al Khobar, Makkah, Madinah, Buraidah, Al-Qahtil and Al-Hassa. They were distributed to low-income people by the REDF through the same arrangements as the loans it gives. We notice that the number of housing units built by the Ministry of Housing and Public Wors is relatively small compared to units financed through REDF. This is because people want to design their own homes, select the sites where they prefer to live, may be near relatives and friends. That is why we find that the design and architecture of homes vary considerably from one city district to another. On the other hand, housing projects set up by the Ministry provided standardized housing units, with adequate infrastructure and services.

Of Large-Scale Housing Projects, some examples include:

1. ARAMCO HOUSING PROGRAMMES

As the workforce expanded due to the development of oil industry the temporary field camps were developed into permanent dwellings. Consequently, ARAMCO planned and built a new town next to each campt to provide housing to the workforce. Before this plan was launced some workers were living in simple dwellings nearby their working sites. That was why several new towns emerged in the Eastern Province near the oil fields and along the tap line which extends from Ras-Tanoura to Jordanian boarders, more than one thousand kilometers long. Also the already existing towns such as Dammam, Gateef, Hafuf, and Mubbaraz as well as some towns experienced considerable expansion.

In 1953, ARAMCO introduced a new Home Ownership Programme for its employees. This programme encouraged the employees to build or purchase houses in the Eastern Province in Dammam, Al-Khobar etc. Then the company developed bilding plots on land provided by the government for free distribution to employees. Most of the Saudi employees preferred to buy their homes in Dammam, Al-Khobar, Dhahran, Gateef, Ahsa, and other towns in the Eastern Region.

In the same year the company launched a Housing Loan Plan to assist its Saudi employees in securing funds to build or purchase family housing in their local communities. The schedule of loans was closely related to salary level. Low-paid employees were eligible to borrow up to a maximum of SR.20,000 while those in higher income groups could borrow up to SR 80,000. Loans were repaid by regular montly salary deductions up to 20 percent.

In addition to this scheme, ARAMCO established a Guarantee Rental Plan. To encourage local contractors to build housing for sale to its Saudi employees, the company guaranteed to pay the rent for a five year period on any such properties which contractors failed to sell. The housing loan scheme and the guaranteed rental plan enabled the company's employees to live with their families in their local communities in all cities and towns of the Eastern Province.

2 AL-MALAZ PROJECT

In 1953, the Government of Saudi Arabia decided to move government offices from Makkah and Jeddah to Riyadth and to build offices for the ministries along King Abdulaziz Road. The government felt the immediate need to provide housing for all the government employees transferred to Riyadh in 1957.

The site chosen for their housing was al-Malaz located 4.5 km north east of the city center. The housiung project was initiated by the Ministry of Finance and Natinoal Economy in cooperation with Riyadh Municipality. In the beginning the Al-Malaz housing project consisted of 754 detached dwelling units (villa) and 180 apartment units in three apartment buildings. The detached houses were built and sold to employees on a long-term payment basis and the apartments were rented on a permanent basis. The site covers and area of 500 hectares. It began to grow as a city by itself and was called New Riyadh. The pattern of its planning and development has become a model for every neighbourhood, town and city in Saudi Arabia.

3. THE SAUDI REAL ESTATE COMPANY:

This is a joint stock company established by the Government with a capital of SR.600 million and with the government subscribing to the majority of shares. The company has built housing complexes, some of which are apartment blocks for rent, and the other are villa type, which have been sold to Saudi citizens. This scheme has contributed considerably to the housing stock.

4. The Universities have built sufficient housing units for their students and staff. Students live in dormitories, while the teaching staff are leased detached houses for reasonable rent.

5. When the Ministry of Foreign Affairs headquarters was transferred from Jeddah to Riyadh, the government built 700 villas which were leased to the Ministry's employees at a reasonable rent. The transfer of the Ministry was postponed for the lack of facilities to accommodate foreign embassies and their staff. For that purpose the Diplomatic Quarters was built. It is a superb enclave with the most modern infrastructure and public services. Once the project was completed, foreign embassies and the Ministry were transferred to Riyadth in the mid-eighties.

Conclusion

This brief examination of the housing trends and experience in some of the Saudi cities indicates that the housing of the urban poor requires the private and public sectors' cooperation. Urban housing policies should also pay more attention to social, economic, cultural and traditional values. Housing has been widely recognized as a major factor in social and economic planning. The functioning of the housing market, land supply and facilities for home ownership in the Arab Gulf States can be viewed as one factor that contributes greatly to a settlement pattern that is more capable of responding to human needs of housing. Although officials from GCC countries did not have the chance to examine Saudi Arabian policies in providing housing to the needy and poor people, I have found through discussions with the Municipal officials that their policies are similar to ours in Saudi Arabia. They have built houses for the poor, and the companies and organizations provided housing to their employees. The GCC governments gave free land grants to low-income people, as well as easy term loans through Real Estate Development.

Since housing patterns, design, and architecture give the cities their character, due consideration should be given to essential design which should conform with the traditional, social and cultural style and the modern mode as well. However, the active participation of citizens in solving their housing problems should be encouraged through establishing societies.

Emphasis should be placed on training programmes in the construction fields to realise community development goals and improve the living environment. There is also an ongoing need for further research to adapt houses to the physical environment and social requirements, especially for the poor and low income households.

Housing the urban poor and low income groups required the undertaking of large-scale projects. Different agencies have taken part in providing housing either through ownership or rent (on an affordable basis).

LARGE-SCALE HOUSING PROGRAMME - THE ARAMCO EXAMPLE

In 1953 ARAMCO introduced a new Home Ownership Programme for its employees, ARAMCO also established a Guaranteed Rental Plan to encourage local contractors to build housing for sale to its Saudi employees, the company guaranteed to pay the rent for a five year peior on any such properties which contractors failed to sell. Housing finance was provided by: The Real Estate Development Fund, Ministry of Housing and Public Works, National Banks, Joint-stock companies with funds from both the government and individuals.


Impact

In Riyadh 100,000 plots given to the poor in ten years

In 20 years REDF granted 425,000 amounting to Sr.105,646 billion loans for the construction of 510,000 housing units.

2485 loans amounting to SR.5,170 billion to build 29,500
units

In Oreijah 30,000 households received free plots measuring 400 sq.meters.

A farm of 300,000 sq. m with over 1,000 trees was converted into a public park.


Sustainability

In the last 17 years, 1,200,000 plots, ranging from 400 to 900 square metres each were given away by municipalities to eligible people in different Saudi cities. In the last 20 years the Real Estate Development Fund (REDF) granted 425,000 loans to individuals totalling SR.105.646 billion (US$28.172 billion) for the construction of 510,000 housing units. Loans are repayable in 25 years with no interest and 20% of this loan is deducted left with 80% to repay.The Government through the ministry of Housing and Public works has built over 25,000 housing units in the cities of Dummam, Jeddah, Riyadh,Al-Khobar, Makkah, Madinah, Buraidah, Al-Qahtif and Al-Hassa and distributed to low-income people by the REDF on the same terms as the loans are given.


Contact

    Mr. Abdullah Al-Ali Al-Nuaim, President
    Arab Urban Development Insitute (AUDI)
    P.O. Box 6892 Riyadh
    Saudi Arabia
    11452
    966 1 4418100\ 4419876; Fax: 4418235

Sponsor

    Arab Urban Development Institute (AUDI)
    Mr. Abdullah Al-Ali Al-Nuaim, President
    Arab Urban Development Institute
    P.O. Box 6892 Riyadh
    Saudi Arabia
    11452
    966 1 4418100\ 4419876; Fax: 4418235

Partners

    National Government of Saudi Arabia
    Mr. Abdullah Al-Ali Al-Nuaim, President
    Arab Urban Development Institute (AUDI)
    P.O. Box 6892 Riyadh
    Saudi Arabia
    11452
    966 1 4418100\ 4419876; Fax: 4418235

    Daghistani, Abdal-Majeed Ismail
    Riydah
    Saudi Arabia

    Al-Ankary, K. M. and El.S. Bushra
    Riyadh
    Saudi Arabia


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