Saudi tax proposal on undeveloped land hits property shares

Riyadh

SAUDI Arabian real estate shares tumbled on Tuesday after the Cabinet approved a proposal to tax undeveloped land in urban areas - a policy that could shake up investment incentives in the kingdom and help to resolve a housing shortage.

Much urban land in the kingdom is owned by wealthy individuals or companies who prefer holding it as a store of value, or trading it for speculative profits, to the process of developing it. Some analysts have estimated 40 or even 50 per cent of space inside big cities such as Riyadh, Jeddah and Dammam is undeveloped.