The “Doing Business in the World” report ranks Saudi Arabia as the easiest location to register property in the world. One day before the notary public, two hours, and it’s done.
It’s a uniquely misleading comparison. Consider: rather than opening Excel, inputting a data set, and inputting a formula, I often turn to my trusty calculator. I wouldn’t pretend my calculator outranked Excel simply because it handles arithmetic better. So too with the property registration system in Saudi Arabia: often faster than other systems, but only because of it’s limited feature set.
The World Bank, based on local lawyers, reports:
…The buyer will simply be required to appear before the notary, sign a confirmation of receipt of the title deed and receive the title deed. The whole procedure will take approximately two hours.
For Saudis, registering property is a matter of sitting down over tea and waiting for the kindly sheikhs and their clerks to review all the documents. Takes minutes.
For non-Saudis, it’s different. But we’ve discussed the distinctions between Saudis and non-Saudis before. For real estate, there are broader implications that affect all property owners. What are the mortgage rules? What are rights to grant and restrict access, to subdivide, to maintain easements, covenants, rights-of-way and municipal leases? Takings and condemnation proceedings? Zoning rules? What if a prince alleges some claim of title?
Real estate systems start out “simple” – and then accrue regulations and controls after certain types of abuses and fraud and addressed. Consider the U.S. property registration system (as recorded by the World Bank):
- Obtain a title report (Saudi skips that step – but should you?)
- Produce an environmental impact study (Saudi skips that step – but is this a good thing?)
- Pay property tax (Saudi omits property taxes; for non-Saudis, income taxes may apply, particularly if one non-Saudi sells land to another non-Saudi…since this is exceptionally uncommon, it’s not likely to come up…but one might ask, why is it so uncommon?)
Ranking the Kingdom an attractive destination for businesses because it is easy for a Saudi to “register property” makes as much sense as ranking Intel and AMD chipsets below office calculators because it’s much harder to get these processors to generate answers to simple math problems.
The Kingdom is making serious efforts to improve its basic administrative operations. It has opened up to foreign investors – to some extent. But perhaps the World Bank would come closer to reflecting reality if it just asked for quotes to perform the transactions it measures, rather than just asking “what process” and “how long.”
[...] in Saudi Arabia? Maybe…maybe not… In a series of posts (see Part I, II, or III) evaluating the World Bank’s Doing Business in the World ranking system, I noted a number of [...]