(MENAFN - Arab News) Saudi real estate market needs more than SR500 billion in the next five years to finance housing projects, a real estate expert has said.
Abdulhadi Al-Rashidi, GM, Real Estate Development Company, said there was a big drive for real estate development, both at governmental and private sector levels, or on public private partnership (PPP) basis, but difficulty arises when it comes to funding.
He said funding of projects still depended to some extent on the investor's (financial) strength and that use of debt instruments such as sukuk (Islamic bonds) had not expanded except for bigger projects.
Since housing and development remain in the focal point of both public and private sector firms during the current year, implementation of affordable housing projects has been initiated, especially for low-income categories that have been mostly affected by price hikes over the last few years. House rentals sometimes consume 50-60 percent of the low-income categories' annual income, he said.
He expressed belief that the PPP form will contribute to finding solutions for housing bottlenecks in the Kingdom, particularly in light of directives of Saudi leaderships related to securing housing for all citizens of different categories. House rentals will, accordingly, witness some degree of decline from current levels, he said.
On financing programs from banks for real estate investors, he said local banks are still waiting for issuance of mortgage systems whereby they could protect their rights, which are originally deposits of shareholders.
On their projects, Al-Rashidi said they plan to build 6,000 housing units in Riyadh and another 3,000 units in Jeddah. Funding for the projects will come from their own resources and the housing units will be accessible for Saudi citizens and residents in cash or through funding solutions on installment basis, he pointed out.