A move by Saudi Arabia to tax undeveloped land in urban areas, which could help make property more affordable, may support real estate stocks in the kingdom.
The cabinet told the Council of Economic and Development Affairs, a new body created by King Salman after his accession and chaired by one of his sons, to prepare a mechanism for the tax, saying the matter was urgent.
It remains unclear when and how the tax will be implemented.
Much of urban land in Saudi Arabia is held by investors aiming to resell it at a profit. This has pushed up land prices and hindered the implementation of a state housing program.
Many potential house buyers cannot afford the 30 percent down payment required by law, Aljazira Capital said in a report this month. The new tax may force land owners to sell and increase the overall supply of property on the market.
The news could be positive for developers such as Dar Al Arkan and construction firms including Abdullah Abdul Mohsin al-Khodari and Sons. A more active property market could also help banks boost their mortgage businesses.
Elsewhere in the region, Oman's Dhofar International Development and Investment Holding Co may rise after winning a contract from Oman's government to build and operate a $630 million power plant in the city of Raysut. Saudi Arabia's ACWA Power and Japan's Mitsui & Co were also part of the winning consortium.
Also, news that Oman's ruler, Sultan Qaboos, returned home "in complete health" on Monday after an eight-month medical stay in Germany may boost local investor sentiment.
In Dubai, builder Arabtec may rebound further after winning a $283 million contract from Saudi Aramco to build 380 villas in Saudi Arabia.
Reuters
24 March
