Riyadh-Mubasher: Fees on undeveloped plots within Saudi Arabia's cities – known as ‘white land’ – will help reduce the demand-supply gap for affordable residential units, according to a report from NCB Capital (NCBC).

This week, Saudi Arabia’s ministerial council approved imposing fees on white land within city boundaries – but the relevant details have yet to be issued.

NCBC believes listed developers such as Dar Al Arkan, Akaria, Arriyadh Development, Emaar and Knowledge Economic City will be negatively impacted by the fees. Meanwhile, players in the cement and construction sectors are likely to benefit from the expected increase in land development activity, the report stated.

However, the impact will depend on the definition of white land, considering that most of these companies have developed land plots.

The regulation will decrease land prices, boost construction activity and increase the Saudi bourse’s trading volumes, NCBC said. It added that the decision will increase demand for labourers, which may result in a significant shortage.

Land prices have increased historically at an average of 7% per year, due to the previous trend of owning and not developing or selling land plots.