contribution to GDP from 5% to 10%; 2) reduce the average time required to approve and license new residential real estate; 3) reduce the housing unit cost from 10x to 5x of the gross individual annual income; and, 4) increase the real estate financing to non-oil GDP ratio from 8% to 15%. e The Saudi Commission for Tourism and National Heritage is looking to increase and develop hospitality facilities and tourism services. The ministry targets by 2020 to increase the number of hotel rooms/apartments by 39% to 621.6k. Positive government ambitions but... The rise of real estate finance to non-oil GDP from 8% to 15% implies an incremental funding of US$32bn which could finance c212k additional units by 2020 or c53k additional units p.a. This compares to an estimated annual demand of 181k units which come on the top of the existing cl.2mn shortage of housing. ..needs to be combined with land tax and sukuk issuance initiatives Based on the target Key Performance Indicators (KPIs) set for the Ministry of Housing, we estimate the initiative to be supportive but not sufficient to cater to the natural annual demand which is 3.5 times more elevated than the implied additional supply funded by the programme. We understand this initiative has to be combined with the land tax initiative and the potential sukuk issuance from the Ministry of Housing which could add further liquidity to the REDF to finance more units. Land tax - gradual revenue source Land tax among flagship measures adopted by the Saudi government We expand more below on our understanding of the land tax initiative which was recently approved by the Cabinet to tackle the housing shortage and raise government revenues. Saudi Arabia’s Cabinet announced in November 2015 that it will gradually levy a 2.5% tax on undeveloped land plots owned by persons or private entities in urban areas, after the country’s Shura council approved a proposal to impose taxes on the so- called white lands. The draft law