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Poor Saudi slums highlight wider housing problems

Sunday - 1/12/2014, 1:34am  ET

In this Wednesday, Dec. 11, 2013 photo, Nidal Abdulrahman Taiba, left, and Usamah Shehatah of the Jiddah Development and Urban Regeneration Company point at a model for new housing units in the Red Sea city. There are 50 slum areas and unplanned settlement in Jiddah, which is the kingdom’s second largest city after its capital Riyadh. The city has plans to regenerate the slums to make way for new subsidized housing for its own citizens, many of whom cannot afford to buy their own homes. The gap between availability and affordability has left many Saudis frustrated and blaming the government for corruption and low wages. (AP Photo/Aya Batrawy)

AYA BATRAWY
Associated Press

JIDDAH, Saudi Arabia (AP) -- Saudi Arabia is quietly planning to raze slums in one of its largest cities to make way for newer, restored neighborhoods as part of a wider plan to keep up with soaring demand for affordable housing.

A gap between what is available on the market and what many Saudis can afford has left people frustrated and accusing the government of corruption. A shortage of low- and middle-income housing means millions of Saudis cannot afford to buy a home.

Young Saudis are especially affected since it takes years of saving before many can afford to buy a home, often a precursor to marriage.

To address the housing shortage and public grumbling, the Red Sea city of Jiddah is a testing ground for a plan that includes getting rid of most of its roughly 50 unplanned settlements, which comprise a third of its built-up area, according to municipality figures.

In their place, the city plans to build subsidized housing complexes for Saudis.

If this new model for revamping the kingdom's second-largest city succeeds, it would be replicated throughout Saudi Arabia in areas where aging infrastructure needs overhaul.

The project is new, and even revolutionary, for a country where speaking openly about poverty is taboo and can lead to arrest. There are no official government figures on poverty levels in Saudi Arabia and several Saudi-based research analysts say there are no mechanisms in place to permit studies on it.

In 2011, Saudi blogger Feras Bugnah was detained for several days with his crew for making a video on poverty that showed slum housing in the capital, Riyadh. Bugnah's video said that 70 percent of Saudis do not own their own homes.

Discussion of poverty can lead to uneasy questions about the long-held social pact in Saudi Arabia, whereby citizens give their loyalty to the ruling Al Saud family in exchange for entitlements and benefits from the state.

Saudi Arabia is the world's top oil exporter, the Arab world's largest economy, home to some of the world's super rich, and known for its cash handouts around the world.

At the peak of Arab Spring protests in 2011, King Abdullah announced a $130 billion public spending plan that was largely seen as a move to buy domestic stability. He raised the monthly minimum wage to $800 and set aside around $70 billion to build 500,000 apartments for low-income Saudis. He promised millions more for the government's housing loan fund, vowed to fight corruption and pumped some $37 billion into a fund for lower-income Saudis to access interest-free loans for needs such as marriage and buying furniture.

But the billions of dollars in long-term projects have not satisfied the immediate needs of the poorest Saudis.

Fayyaz Ahmad, associate director of real estate adviser Jones Lang LaSalle in Saudi Arabia, says a third of new entrants into the workforce cannot afford a house costing more than $133,000, which in a city like Jiddah buys a small two-bedroom apartment.

"The government is doing a lot, but the population is large and how to improve people's access to cheaper loans is a real challenge," he said. "There is no quick solution."

Jiddah resident Muhammad Al-Bakri, 30, and his friends founded the Young Initiative Group, which seeks to address social challenges in their hometown.

"Wherever you go in Saudi, there is a housing crisis," Al-Bakri said. "When it comes to 'unplanned areas,' these people have been there for two, three, four generations."

His perspective changed in 2010 when he and a group of wealthy friends decided to visit the poor Jiddah neighborhood of Harazat and pass out air conditioners to needy families. It was the first time they had been to such an impoverished area, where families live in cramped apartments and children struggle to find shoes.

"When we first came back with the pictures, people asked me where in Africa is this. I told them it is 20 minutes away from where we are," Al-Bakri said.

He says there is a perception among Saudis that official charities and zakat, or annual donations by Muslims, have dealt with poverty.

"Most people are in a bubble. ... That's the divide we have," Al-Bakri said.

Usamah Shehatah has spent countless hours drafting proposals to deal with Jiddah's slums. He runs the Slum Areas Development Department for the Jiddah Development and Urban Regeneration Company, Saudi Arabia's first municipality-owned agency tasked with tackling the country's housing gap. Other cities across Saudi Arabia, including Mecca and Riyadh, are following suit with similar models.

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