Saudi Arabia's Affordable Housing Shortage

Saudi Arabia’s King Abdullah is paying a price for his own generosity. In 2011, as the Arab Spring swept across the region, the 89-year-old monarch earmarked 250 billion riyals ($66.7 billion) to build homes across the kingdom. A growing housing shortage was a potential source of unrest: Analysts estimate the existing shortfall at 500,000 homes. The government also vowed to expand the availability of mortgages.

Two years later, Saudi Arabia has little to show for its efforts. Generations of Saudis have directly petitioned their king for land. The result has been the distribution of plots in cities throughout the kingdom, with roads, water, and power thrown in for good measure. Years of giving away land have left the government with almost no space of its own to develop in urban areas, according to Adnan Ghosheh, an adviser to the Housing Ministry. That will delay building as the government chooses between buying back city plots whose price has been inflated by speculation or paying a premium to build in the desert.