The real estate sector reported a positive performance in 2019, however, it was hit by the COVID-19 outbreak in 2020 which weighed on other sectors as well, Al-Arkan Real Estate Development Co.’s board chairman, Yousef Al Shelash, told CNBC Arabia.
The company’s sales were greatly affected by the pandemic during the last 3 months, he added, despite launching a new e-platform in January.
On raising the value-added tax (VAT) to 15%, he said that this decision will have a negative impact on the buyers and not developers as they will bear the cost.
Al Shelash also noted that such a decision will lead to slightly decreasing realty prices, nevertheless, prices will increase significantly while sales volume will decrease.
He also mentioned that some factors could weigh on the real estate sector, such as raising customs duties on some products which will lead developers to revert to the local market.
“Most banks do not tend to finance long-term projects, therefore, the real estate sector was already facing difficulties even before the pandemic outbreak. Consequently, Dar Al-Arkan had to issue securities,” he stated.
Al Shelash confirmed that the company enjoys strong liquidity which covers all obligations for 2 years, adding that it has zero debts until 2022.
“The company resumed work in 2 projects under construction; Shams Al Riyadh and I Love Florence Tower in Dubai,” he concluded.
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