Dissertation_Dr Faisal Almubarak

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cost of a new dwelling. Consequently, buyers sought cheap land at the expanding fringe,
hence contributing to the leap-frog pattern of urban development characterizing Riyadh as
well as many other Saudi cities' urban forms. 51
Thirdly, the development programs of the mid 1970's resulted in an influx of foreign
firms and laborers to help build the new government projects causing an acute housing
shortage. The cost of housing multiplied five fold between 1970 and 1979. Finally, the
spurt of construction triggered by the government's first and second national development
plans called for massive imports of construction materials. Saudi ports and land transport
systems, geared toward the relatively slow development of the 1960s, were flooded with
tremendous imported construction materials stockpiled at ports for months awaiting
processing.
By the middle of the 1970s, it was clear that Riyadh was approaching a housing
crisis. Faced with such glaring prospects of the chaotic housing market, and marked by
rackrents and inflated housing prices, the government took the onus of increasing the
housing stock. The government established the Real Estate Development Fund (REDF) in
1974, a totally government-financed agency to enable Saudi citizens and corporations the
opportunity of participating in the production of new housing units, both for private and
commercial uses. The REDF provides zero-interest loans up to $100,000 to individual
Saudi households, due within 25 years. Loans are available to any citizen who is married
and who is 18 years or older, or to single citizens who are 21 years old and above.
Applicants have to provide legal title to the land in a subdivided residential zone.
Recipients are completely responsible for designing and supervising the construction of
their homes. To encourage amortization loans, 20% of the annual payment is forgiven if
paid within sixty days of its due time and if the entire loan is redeemed in one payment,
30% of the loan value is forgiven. The REDF also provides zero-interest investment loans
designed to help provide residential, office and commercial space by Saudi private
developers. Loans can go up as high as $3 million to such investors.
Thanks to the 1973 increases in oil prices, government's oil revenues highly
increased, causing the state to shift gears to expedite its modernization program. Then,
better than ever, improving the living standards of the population was both economically
feasible and politically viable. Government projects and policies created a vacuum for
adept and skilled workers only to be imported from foreign nations. The increase in