JEDDAH — Saudi Arabia needs SR1.3 trillion investment to construct 2.4 million housing units between 2011-2020, the National Commercial Bank said Sunday in its “Saudi Housing Review” for the month of September 2012.
It indicates the magnitude of expenditures required by both government and private entities in order to close the supply and demand gap. The growing demand in the housing market will create many opportunities for both commercial banks and real estate developers to take on more active roles.
In the medium to long-term, the mortgage law will have a positive impact on increasing home ownership, as lenders gain more confidence that the law will provide needed protection. These new initiatives, which are aimed at addressing the housing market across different income groups, will gradually remedy the supply-demand imbalances toward equilibrium.
Commenting on the enactment of the mortgage law, NCB said, “While all income segments will stand to benefit from the enactment of the mortgage law, those within the affluent segment will benefit the most.”
The report noted that government programs, specifically, the Real Estate Development Fund (REDF), provide housing assistance to Saudi citizens in the form of interest free loans. According to 2010 data, the REDF provided loans in the amount of SR6.7 billion. The loans were disbursed for financing the construction of owner occupied units. Loan repayments in 2010 stood at SR5.9b. The REDF has disbursed SR172b loans for the construction of nearly 700,000 homes since its inception. — SG