Saudi Arabia’s Ministry of Housing has set up a 98 million riyal ($26 million) partnership with a private developer to build 462 housing units in the east of the capital, it said on Tuesday.
It is the ministry’s first public-private partnership and could become a model for the kingdom’s home construction plans, which aim to make home ownership more accessible for Saudis.
The government is struggling to meet demand for homes for its young and growing population of 21 million nationals, while also cutting back on its traditionally generous public spending after a sharp fall in oil prices since 2014.
The ministry will hold 13.63 percent in the new venture with Al-Tahaluf Real Estate Company, which is jointly owned by Saudi Arabia’s Hamad bin Mohammad bin Saedan Real Estate Investment Group and U.S.-based Hovnanian Enterprises Inc.
The project involves building 426 duplex units and 36 single home villas priced between 530,000 and 590,000 riyals ($141,000-$157,000). Design is by the Netherlands’ Studio Piet Boon.
The ministry plans to issue tenders for 100,000 units in 2017 as part of its housing initiative, Naif Abdulmouhsin Al-Rasheed, an adviser to the minister, told Reuters.
The government said in June it aimed to raise the proportion of Saudis owning homes by 5 percentage points to 52 percent by 2020 and outlined plans to attract foreign and local developers to build 1.5 million units over the next seven or eight years.
Since then, officials have introduced other reforms, including a tax on undeveloped urban land, new national home financing and refinancing companies and an increase in the share of funding banks can offer for loans purchases.
The government has also signed memoranda of understanding with China, South Korea and a Saudi-South Korean consortium to cooperate in building hundreds of thousands of homes in al-Ahsa and northern Riyadh.