SAUDI ARABIA will need to pump $346 billion  into building 2.4 million new homes over the next decade in order to meet demand but will fall short by more than $100 billion, according the National Commercial Bank (NCB).

The total housing stock in Saudi Arabia is expected to expand by 2.4 million units during the next 10 years, from 4.6 million units in 2010, the Saudi bank said.

It said annual demand will rise from 195,000 in 2011 to 264,000 units by 2020 based on factors such as a growing population entering the marriageable age, an expanding labour force and a rising per capita income.

The government has injected SR250 billion ($66 billion) into construction of 500,000 new homes mainly for the low-income segment and has also passed the mortgage law, which is expected to stimulate the demand for housing. After factoring in this allocation, total expenditures will reach SR900 billion ($239 billion), still short by SR400 billion ($106 billion) to meet the SR1.3 trillion ($346 billion) investment needed to construct 2.4 million housing units, the report said.
 “The value of gross fixed capital formation (GFCF) expenditures in residential construction reached nearly SR43 billion ($11.47 billion) in 2011, and the total GFCF for 2011-2020 is projected to amount to SR650 billion ($173.32 billion). This number, however, falls short of the total investment needed estimated at SR1.3 trillion ($346 billion),” the report said.