Chinese model proposed for Gulf states’ housing shortages

16 September 2013

China State Construction Engineering Corporation (CSCEC) wants to bring its vast resources and access to Chinese capital to bear on the housing shortage in the Middle East.

The firm, said to be China’s largest construction and real estate conglomerate, is planning to target the huge demand for housing in Saudi Arabia and the UAE in particular by offering a complete turnkey approach to housing developments.

It’s a business model that has worked so well in China that 10% of Chinese people now live in homes built by CSCEC, the company’s Middle East chief, Yu Tao, claimed in an interview with Construction Week.

By taking on the mantle of "master developer", CSCEC has saved the Chinese government "a lot of headaches", and time, Mr Yu said.

Typically the government hands over large plots of land with a request for a set number of houses. CSCEC then looks after the master planning, financing, construction, sales and ongoing maintenance.

"If a developer or government cuts this (housing process) into pieces, the whole process will become longer," Mr Yu said.

After the Arab Spring uprisings in the region in 2011, Saudi Arabia’s King Abdullah announced a $66.6bn scheme to build 500,000 low-cost housing units over several years to help address an acute shortage among the kingdom’s young, growing population.

New Chinese houses: CSCEC says it has built 10% of new homes in China and hopes to build mass housing projects in the GCC (Wikimedia Commons)

But the scheme has been slow to get off the ground, prompting the king to issue decrees earlier this year ordering various ministries to work together.

In July, Saudi Arabia’s Real Estate Development Fund agreed funding of over $1.33bn – through more than ten thousand individual loans – for the construction of 12,000 new homes.

Clearly, though, CSCEC hopes the kingdom will consider a different approach – mass housing.

The company has already worked on mass housing schemes in Algeria and Libya, and over the next 20 to 30 years, Mr Yu said, the firm wants to deliver such schemes in the oil-rich states of the Gulf Cooperation Council (GCC).

He said that, with a turnover in 2012 of $93bn and a workforce of around two million people worldwide, CSCEC has the resources needed, not to mention access to capital from Chinese banks.

"Chinese banks have become stronger in the world," he said, adding: "We’re very keen, if any of the governments in the GCC would like to assign us to be a master developer."

Source: Construction Week

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