Real Estate
From The Report: Saudi Arabia 2016
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Benefitting from rising incomes and a youthful, growing population, Saudi Arabia’s real estate sector has seen steady expansion in the past decade. Although this increase has been more modest than in its GCC neighbours, it is clear that strong demand for residential real estate will continue over the long term thanks to the country’s demographics. In the short term the hospitality and office segments may face a surfeit of supply and a shortage of demand with major new real estate developments in the pipeline. On the residential side rents are stabilising, but tenants face financial obstacles to home ownership. However, the central bank’s announcement that it will allow specialised mortgage companies to increase their contribution to home financing to 85% will greatly improve access to home loans.

This chapter contains interviews with Majed Al Hogail, Minister of Housing; and Bader Al Saedan, Managing Director, Al Saedan Real Estate.

Articles from this Chapter

Overview

Fine tuning: Regulations aim to sustain growth while preserving stability
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Benefitting from rising incomes and a youthful growing population, Saudi Arabia’s real estate sector has seen steady expansion in the past decade. Although this increase has been more modest than in its GCC neighbours, it is clear that strong demand for residential real estate will continue over the long term thanks to the country’s demographics. Budgetary Concerns Weighing up the obvious opportunities presented by the biggest market in the Gulf region, investors have understandably taken a…

Interview

Right at home: OBG talks to Majed Al Hogail, Minister of Housing
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Interview:Majed Al Hogail How is the ministry fostering public-private partnerships (PPPs) with local private developers? MAJED AL HOGAIL: The ministry acknowledges the potential benefits from partnerships with real estate developers and is planning to rely on PPP programmes to promote housing investment. This partnership should provide the housing market with 1.5m housing units (villas, apartments or developed lands) over the next five years. The PPP programme will facilitate the whole value…

Interview

Affordable solutions: OBG talks to Bader Al Saedan, Managing Director, Al Saedan Real Estate
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Interview:Bader Al Saedan With lower public spending and a doubling in office space expected, can commercial developments continue to attract investment? BADER AL SAEDAN: Most developers are moving to commercial developments and we are expecting a lot of business in the near future in the city of Riyadh. We will see companies demanding office spaces, but not all companies will move to the King Abdullah Financial District, which only targets “AAA” companies, due to expensive rents. Most…

Analysis

Finance options: As a 2014 mortgage law aims to curb lending, new initiatives help Saudis get on the property ladder
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In November 2014 a new mortgage law was introduced for loans covering residential real estate transactions in the Kingdom. This imposed a 70% loan-to-value (LTV) rule on residential mortgages. A study by the Saudi Arabian Monetary Agency (SAMA) published in the first quarter of 2015 showed that the regulation put citizens of Saudi Arabia on the same footing as those in Qatar and Kuwait, but that the average LTV in the GCC was 74%, with Bahrain having no limit at all. Citizens borrowing in the UAE…

Analysis

The way forward: First domestic real estate investment trust blazes a new trail
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The firm building the world’s tallest skyscraper, the Jeddah Tower, overlooking the Red Sea port of Jeddah has developed a funding vehicle for the construction that is a first for Saudi Arabia. The tower will be higher than Dubai’s Burj Khalifa and will form the iconic centrepiece of Jeddah Economic City. Thanks to new regulations from Saudi Arabia’s Capital Market Authority (CMA), the construction work will be funded by the country’s first real estate investment trust (REIT), a finance model…