Key Challenges to Implementing the Master Development Delivery Model in Saudi Arabia
There are 3 key technical challenges to implementing the Master Development Delivery model unique to the Saudi market which would need to be addressed in order to successfully adapt the model and execute the model across the Kingdom:
- Coordination with municipality and government ministries
In order for the model to be successful, extensive and up-front communication and coordination is necessary between the Master Developer’s technical interface office and all relevant government ministries involved in the building process. A series of systems and processes must be setup which clearly delineates the roles and responsibilities of each entity. In addition, government ministries must agree to enforce the master developer’s approval process when accepting applications from private-sector developers so that the system can function properly.
- Issuance of the land title deed and development control
At present, the issuance of the land title deed is the sole form of development control in the KSA Market. Once a private-sector developer obtains a title deed, they are able to effectively exercise full control over the land. This system would need to be altered in order to execute the master development delivery model. Firstly, the master developer would need to retain some degree of development control even after issuance of the title deed in order to execute the design, development and other regulations inherent to the system. Secondly, government agencies and ministries would need to adjust their systems so that there is coordination between the master developer and the sub-developer. Thirdly, banks would need to accept that title deeds, even with development control regulations attached to them, are still acceptable in order for the sub-developer to apply for construction loans.
- Lack of a Real Estate Regulatory Agency
The master development delivery model requires extensive coordination and interaction between ministries, private-sector entities, government developers, and financial institutions. In addition, the rules and regulations required to execute the model cut across traditional lines of government authority. Therefore, the setup of an overall governing body (a Real Estate Regulatory Agency) to monitor the entirety of the system, implement needed coordination, track and monitor all documents, and provide training and assistance to private-sector sub-developers, would greatly accelerate successful execution of the model.
These technical challenges would need to be initially addressed at a national level and from a policy perspective. After a baseline is established by the central government, local municipalities would then require a series of initiatives based on local market realities in order to activate the master development delivery model.