Abdullatif Al Shelash is not only a real estate expert, but he also says he has a deep understanding of Saudi Arabia’s construction industry — and construction in the kingdom is on the rise. Globaldata.com reports ’s construction market was $120.4 billion in 2021 and that market is expected to have an average annual growth rate of more than 4% from 2023 to 2026.

The report also states that investments in transport, renewable energy, housing, and tourism sectors will contribute to the expansion.

“One segment is government projects and that’s more regulated, very well organized construction industry. Contractors who operate in that sector are more type A contractors, and everything is very well organized in that sector,” Sheikh Abdullatif Al Shelash says of Saudi Arabia’s construction industry, which he explains is divided into three segments.

“The second tier is big corporate construction from the private sector that deals with big contractors. Then there [are] smaller contractors that are dealing with individuals, and that really need to be organized over time.”

Abdullatif Al Shelash says things have “been a bit volatile” because of an increase in the inflow of construction. Some of the government interventions in the housing industry have created some unpredictability for the smaller segment or individual segment with smaller contractors.

“Quality on this construction 15 years ago was very bad, but we’ve seen an improvement in the last 15 years in terms of really the skilled labor, in terms of also the material being used, in terms of really it’s cost has increased of course, for sure,” Abdullatif Al Shelash says.

“But we all know, when you construct something and you actually spend more money on the construction to really achieve the better quality, you will have houses that really would [last].”

Saudi Arabia has been in international headlines lately for an urban fantasy project that CNN reports will be called “The Line.” The city in the desert — consisting of one enormous building — will span 106 miles and eventually house 9 million people.

CNN also reports that the vertical metropolis is designed to sit 1,640 feet above sea level and will run totally on renewable energy with no roads, cars or emissions. The project’s official website, neom.com, deemed it “a blueprint for tomorrow” and “an accelerator of human progress.” Said the official Saudi Press Agency, “It puts nature ahead of development and will contribute to preserving 95% of Neom’s land.”

Neom.com also states the project launched an exhibition in Jeddah, Saudi Arabia, this summer to share the official designs of The Line with the public.

Despite new projects popping up throughout the kingdom, Abdullatif Al Shelash says one of the biggest obstacles to the mortgage industry historically was house depreciation in Saudi Arabia.

Sheikh Abdullatif Al Shelash Explains Saudi Housing Depreciation

Why were houses depreciating in Saudi Arabia while globally homes tend to appreciate over time? House depreciation in Saudi was due to poor construction and a lack of standardization, according to Abdullatif Al Shelash.

“So for every home in Saudi during that time being constructed, you can not really determine how the house was being built, what was the standard?” Abdullatif Al Shelash asks. “The windows are different dimensions because every house is being built according to individual needs. There is no big developer.”

Sheikh Abdullatif Al Shelash Describes How Buying a Property in Dubai Differs From Saudi Arabia

Al Shelash says that the construction codes are far stricter in Dubai than they are in Saudi Arabia. In Dubai, he says, there are three main developers, and each builds according to spec. “Here in Saudi, you would not have those specifications. You will go to one street and you will find a house being built in one way, and you find another house built in a totally different way.”

Abdullatif Al Shelash explains that, in Saudi Arabia, the construction of houses was originally done with smaller contractors and typically arranged by someone who had never built a house in their life.

“He’s buying the land, he’s hiring the construction designer,” Abdullatif Al Shelash says. “Usually, they range from very low quality to mediocre, mid-quality designers. There was no supervision of the construction. Also, end-of-construction supervision by the municipality was nonexistent during that time.”

Abdullatif Al Shelash says when a house is built in more developed countries, the municipality will come in and there’s a considerable inspection list to check and ensure that the property has been constructed according to the codes and standards for construction and building methods implemented in that country. And if there are any variations, the municipality will force the contractor to correct them before allowing inhabitants to occupy the abode.

“In Saudi, it was not the case, unfortunately, in the last 15 years,” Abdullatif Al Shelash says. “Right now, we’re seeing the building codes coming out. Right now, we’re seeing more regulation coming to the construction sector to really organize it for individual buildings.

And that can increase the cost of construction for sure, but also will offer much better quality. Why? Because in an economy, the biggest asset of any country is its real estate, especially in housing. That’s the true assets of any country because that’s where most people’s wealth tends to go, which is toward their mortgages.”

How Home Loans Have Reshaped Saudi Housing Market

Mortgages are a considerably newer addition to Saudi culture. Mortgages became legal in Saudi Arabia in 2012, according to bloomberg.com.

“Mortgage penetration in Saudi is still in its infancy, it’s at the beginning stage, most of the property [is] unleveraged in Saudi,” Abdullatif Al Shelash says. “You go to any major city globally and you will find the percentage of mortgages will reach to 80%, 85%. Meanwhile, in Saudi, I don’t think that it has reached more than 5% and 10%.”

However, Abdullatif Al Shelash acknowledges when it comes to home loans in Saudi Arabia, the sky is really the limit.

“There is tremendous opportunity,” he concludes.

Jane