The Kingdom of Saudi Arabia

Published: 2019-05-21 16:41:25
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The area of concern for the project is the dynamics and the hurdles that have been encountered in the mortgage laws in the Kingdom of Saudi Arabia (KSA). The project will be researching the initiatives that have to be taken to transform the pent-up demand into real demand typically be being restricted to a legal framework. Conventionally, the adoption of the mortgage law was described as a sequence of phases that were characterized by different timeframes and analogies of varying legal ideologies. If the mortgage laws remain unchanged, the changes in the real estate and housing sector will remain unchanged. If the mortgage law is approved, some of the housing problems in the KSA will be solved (Buchele, 2008. However, the failure of approval will sink the real estate sector back to the dark, challenging times.

1.1 Practical relevance

Increased home ownerships results in increased benefits for an economy, including collateral for borrowing, accumulation of wealth, and investment in the local economy. Saudi Arabia's real estate is characterized by imbalances in housing and home ownership in the middle and low-income levels. A detailed legal analysis and framework will help in the reduction of pent-up demand and increase the financing of mortgages (Kane, 2010). By changing the pent-up demand into actual demand, the law would stimulate the developers of housing to have a good comprehension of the real estate segments. The practical relevance is to bring out a detailed understanding of the benefits of the mortgage law and possibly provide detailed analysis and framework for the implementation of the law into the actual market.

1.2 Theoretical Relevance

The restructuring of some of the mortgage laws has resulted in the solution of many housing and real estate predicaments. Besides, not all the challenges can be solved by the availability of structured financial and industrial laws. The changes in the real estate can only work by substantiating it with other factors like financial services, creditors rights guaranteed, and a well-structured market environment (Al Rajhi & Al Salamah, 2003). Therefore, the changing patterns in the real estate industry will enable the shift of focus from the contemporary analysis of the market problems to a more detailed of the legal perspectives.

1.3 Research question

The research question in the study is:

How does the mortgage law help to transform pent-up demand into real demand?

To enable the answering of this question, different sub-clauses and elements in the mortgage law that relate to the actual real estate market must be analyzed. The research project is both theory building and practical due to the analysis of the contingent factors in the real estate sector. The study guiding question is: How will the mortgage law impact to the operations and the development of the real estate sector?

2. Research design

This section comprises the research strategy (still in progress) and highlights the connection between the methodological and theoretical viewpoints applied for understanding the collected data and shed lights on the major research question that guides the dissertation.

2.1 Reflections on Finance

I do believe that a comprehensive analysis of the financial markets and the real estate sector indicates that the market is illiquid. The price adjustment process is slow due to the time for design, financing, construction, and the slow rate of changing demand. There is disequilibrium potential in the short run due to these shortcomings (Kane, 2010). In a normal financial expert viewpoint, the housing prices intensify pro-cyclicality in any economy. Housing has a dual consequence in the real assets and the outlay in the financial markets. Therefore, the influx of the prices in housing enables the redistribution of wealth in the household sector rather than boost the net summative wealth. My argument will be that my belief on the changes in the real estate will affect my opinion on the implementation of the mortgage law to the actual real estate market. The analysis of the research will be based on the theory that will facilitate the examination of relevant data of constructing meaning to the mortgage law.

2.2 Validity Network Schema

The validity network schema divides the project into the domain of a relation between the domain elements. The domain includes the conceptual, methodological, and the substantive.

Conceptual domain- The conceptual domain entails the explanation that is meaningful for the interpretation of the observations. These include the conceptual models and concepts that are drawn from this domain. In the element level, I will look at the discourses, values, and the practices in housing representing the real estate culture that surround the work process, coordination, adoption, and the implementation of the strategies of increasing the actual demand for housing. In the relational level, I will look at the buyer and consumer behavior patterns between the concepts with regards to how the mortgage law help to transform pent-up demand into real demand does.

Substantive domain- The domain contains the relation into the real world in regards to the study. The events that are valuable to the study are transforming pent-up demand into real demand. This will be the element level in the substantive domain. The relations encountered between the domains will be:

The mortgage law change in the housing sector.

How the consumers (low and middle-income individuals) perceive the instituted law?

How the actual adoption of the changes brought by the law perceived by the developers and the buyers of the houses.

Methodological domain- At this domain, I will determine the suitable method for the collection and analysis of data to ensure that the research question is answered. The answering of the question will move from data to a theory as it is more of a why and how. As a result, the research strategies choices that I can use are not limited to the documentary and action research. The study is however limited to a legal framework and does not cover the constraints of supply. At the element level in the domain, there will be interviews that are semi-structured for the developers and the house buyers. The rational of these interviews is for the establishment of the motivation, perception, and decision-making process of demand for houses. The relation level will create the value though coding of the observations and interviews by use of comparison and theoretical sampling until the actual patterns of demand are achieved.

3. Method

3.1 Initiation of the research

The initiation of the research will be through a literature review that will discover the boundaries that are covered by the mortgage law. An understanding of what is expected after the implementation of the mortgage law will be analyzed. A determination of whether the demand for housing will increase drastically or whether it will be in a set period has to be established. The practical aspects of the implementation and the adoption of the law will be looked into.

3.2 Initial data collection

The use of the semi-structure interviews will be imperative for the collection of data. Legal documents will also be analyzed through the retrieval of past records. The analysis of the real estate sector will enable a comprehensive understanding through the collection of adequate data.

3.3 Analyzing and collecting more data

The research design will be preliminary opinions through theory as the initiation of the research process has not begun.

Theoretical sampling- The collection and analysis of data phases will be simultaneously creating a parallel procedure. The initial results from the first data collection will act as a benchmark for the rest of the collection period. Theoretical sampling will use the initial data collection that will reflect the emerging theories and the developing categories.

Constant comparison- The data that belong to similar categories will be compared for the exploration of the differences and similarities. The regular comparison is usually reliable when conducting research as it results in the identification of the ideas explaining incident relationships.

Extant literature- The use of extant literature will facilitate the comparison of the grounded and the existing data. Extant literature helps to improve the levels of theory and perfect the construct definitions.

Theoretical saturation- Every category needs to be saturated in the event that the same incidents are found. The closure of such is achieved only when the collected and analyzed data does not result in the development of the theory.

4. Theoretical Lenses

The interest of the study is the effect that the mortgage law will have to the real estate market that matches the changes in demand. The theories that can be applied here include the Institutional and Structuration theories. The institutional theory will analyze the changes that take place in the housing market and the displacement of the previous mortgage laws with the new ones to be approved (Buchele, 2008). The replacement of the mortgage laws is expected to have a positive impact on the KSA housing market.


In 2018, after conducting the research (2.5-3years) if proposal is approved, the researcher will be able to craft a sound academic model about; the crucial obstacles that could be overcome or that would worsen, the nature of the complexity of these issues, when the implementation of the New Mortgage Law takes place.



Al Rajhi, A & Al Salamah, A. (2003). Economic Development in Saudi Arabia. New York: Routledge

Buchele, N. (2008). Saudi Arabia-Culture Smart: the Essential Guide to Customs and Culture. London: Kuperard

Kane, M. (2010). Doing Business in Saudi Arabia. Kuwait: Al-Andalus Publishing.

USA International Business Publications. (2005). Saudi Arabia Central Bank & Financial Policy handbook. New York: International Business Publications.



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