Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Saudi- Mortgage law to spur real estate finance sector  Join our daily free Newsletter

MENAFN - Arab News - 05/07/2012

No. of Ratings : 0
Add to Mixx!


Mortgage law to spur real estate finance sector
(MENAFN - Arab News) Saudi stock market hit a five-week high yesterday after the government approved a long-awaited mortgage law. The Tadawul All-Share Index (TASI) surged 143.23 points or 2.12 percent to 6,885.27, its highest finish since May 30. The index has gained 7.3 percent so far this year.

Banks with large retail businesses attracted the most buying on the view that they will be able to attract the most mortgage business through their large branch networks.

Bank stocks rose sharply, helping the sector's index climb 5.1 percent. Heavyweight Al-Rajhi Bank edged higher by 4.08 percent to SR 76.50, Bank AlJazira surged 9.91 percent to SR24.40 and Alinma Bank added 6.43 percent to SR13.25.

Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: "A number of Saudi banks have been pursuing a deliberate strategy of building their asset base through new focused lending in key growth areas such as mortgages. This initial growth in this area has in part benefited from the ability of banks to serve a low-risk, often pre-screened clientele.

He added: "The mortgage law is a potential game changer in as much as, by putting in place a comprehensive regulatory framework for the market to develop, it will give lenders more comfort to expand lending beyond this relatively limited clientele. At the same time, the growing demand for medium-income housing that mortgages will trigger, will boost property development and credit to real estate companies."

He said while proper regulation is critical, this has the makings of a virtuous cycle. Mortgages in Saudi Arabia are just a couple of percent of GDP whereas in many advanced markets they are 60-70 percent, even as much as 100 percent. Even though sustainable growth will have to be measured, the potential over the long-term is tremendous. New opportunities should also emerge in areas such as mortgage bonds and securitization. In short, the law has significantly boosted the sustainable growth prospects in this area even if a lot of work remains to be done, Kotilaine added.

Commenting on mortgage law approval, Abdullah Al-Mubti, president of the Council of Saudi Chambers (CSC), said the new mortgage and real estate financing laws would encourage investors and developers.

He described real estate as one of the fast growing sectors in the Kingdom, adding that the new laws would encourage banks and finance firms to extend more loans to carry out housing and other real estate projects.
He said Saudi Arabia needs about 200,000 housing units annually to meet the requirements of its growing population. "The Kingdom will require 2.62 million housing units by 2020," he pointed out.

Abdul Wahab Abudahish, vice chairman of the real estate committee at Riyadh Chamber of Commerce and Industry, said real estate financing in the Kingdom accounted for only 2 to 3 percent of the gross domestic product.
"This is very low compared to some other GCC countries where it is between 15 and 18 percent," he added.

Abudahish expected the issuance of mortgage law would lead to increasing the capital of Saudi commercial banks to meet increasing demand for loans. "It will take at least three years to get a complete picture of the Saudi real estate after the issuance of the mortgage law," he said, adding that a number of factors are required to make the law a success.

Naveed Siddiqui, CEO of Capitas Group International, said this is a much awaited milestone in the history of the Saudi real estate and housing market. "The mortgage law will pave the way for broader home ownership and a healthier real estate market overall. The guessing game about the Saudi real estate sector is now over. Its growth and stature in the global real estate market is now imminent," Siddiqui said.

The passage of the mortgage law will spur the emergence of a vibrant real estate finance sector that will be truly responsive to customer needs connecting home buyers' demand with housing supply through much needed purchasing power. However, we must watch how these laws will translate into regulations, how the ultimate regulators enforce the laws and manage the sector, and how financiers translate the benefits of the law into better terms and protections for the mass market.

"The ultimate goal should be for the financial sector to fill the huge gap in funding which amounts to SR 1.2 trillion over 10 years," Siddiqui added.
Hamad Al-Shuwaier, chairman of the national real estate committee at CSC, said the new laws passed by the Cabinet would regulate the Kingdom's real estate market, protecting the rights of lenders and borrowers.

"Mortgage law is the real driving force of real estate financing in any country," he said, adding that the new laws would bring more investments to the Kingdom.

Al-Shuwaier estimated the Kingdom's real estate market at more than SR2 trillion. "The problem was not with real estate assets but with shortage of financing," he said. The new laws together with the government plan to construct 500,000 housing units would solve the country's housing problem, he added.

Yousuf Al-Shalash, chairman of Dar Alarkan Real Estate Development Company, commended the government for passing the mortgage law and real estate financing law, and said it would bring about qualitative development of the Kingdom's real estate market. "It will not only stabilize the market but also protect the rights of all parties involved in the business," he said.

Al-Shalash said the issuance of the new law is a quantum leap in the legislative environment for the Saudi real estate sector. "The mortgage registration system will provide the necessary regulations to ensure discipline and flexibility that should allow optimal utilization of the duly registered real estate assets," he pointed out.

Al-Shalash added that the leasing and mortgage finance laws would encourage institutions and mortgage companies to increase funding available for real estate, improving purchasing power and thus helping solve the Kingdom's housing shortage. "These laws will also help create a competitive environment for financing companies and real estate developers, which will ultimately be in the interest of the nation and its citizens," he added.

The new laws would help curb inflation and protect the Saudi real estate market from fluctuations and shocks that have been experienced by many foreign real estate markets, where initially real estate prices rose to illogical levels only to collapse at a later stage, Al-Shalash said.


  MENA News Headlines
Apr 24 2014Qatar- HH Sheikha Moza Meets Mayor of Kobe Visits RIKEN Research Institution ,Qatar News Agency
(MENAFN - Qatar News Agency) Kobe April 24 - Her Highness Sheikha Moza bint Nasser Chairperson of Qatar Foundation for Education Science and Community Development (QF) today held a meeting with the ...

Apr 24 2014Qatar- Sidra-BMC Event Boosts Biomedical Research Publishing ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - A symposium organised jointly by Sidra Medical Research Centre and BioMed Central (BMC) mulled trends in research and on open access publishing here ...

Apr 24 2014Qatar- Mannai Corp Q1 Net Profit up 73% to QR 150.1 Million ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Exchange listed Mannai Corporation (QE: MCCS) net profit is up 73% to QR 150.1 Million for the first quarter of fiscal year 2014 ending March 31 ...

Apr 24 2014Bahraini firms forecasted to grow 10 pct ,MENAFN
(MENAFN) In a report based on a study of over 650 companies across GCC, Kuwait Financial Centre (Markaz) forecasts a growth of the Bahraini companies' earnings by 10 percent in 2014, Gulf Daily News ...

Apr 24 2014Israeli Army Storms Deir Samit Village West of Hebron ,Qatar News Agency
(MENAFN - Qatar News Agency) bron April 24 - Israeli army forces stormed at dawn Thursday Deir Samit village southwest of Hebron city in the West Bank. The Israeli forces conducted raid and search ...

Apr 24 2014Qatar Airways to add more seats on Doha-Vienna route ,MENAFN
(MENAFN) Qatar Airways plans to offer more 1.700 seats on its Doha-Vienna route beginning from September 2014, according to Gulf News. The company aims to expand the growing passenger demand from ...

Apr 24 2014Qatar- QFC Authority Five-a-Side Football Tournament Kicks Off ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Financial Centre (QFC) Authority's first Five-a-side Football Tournament is displaying dribbling skills of executives from Doha's financial ...

Apr 24 2014Qatar Stock Exchange Down 0.05% ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - The Qatar Exchange ended in the red area when trading closed Thursday at 12954.93 points (0.05%) down 6.63 points from the previous closing of 12961.56 ...

Apr 24 2014Israeli Tanks Enter Gaza Border area ,Qatar News Agency
(MENAFN - Qatar News Agency) Gaza April 24 - Six Israeli military tanks on Thursday entered a border area in the southern Gaza Strip witnesses said. The tanks crossed into Gaza in an area called ...

Apr 24 2014President Salva Kiir Relieves his Chief of the General Staff ,Qatar News Agency
(MENAFN - Qatar News Agency) Juba April 24 -South Sudanese President Salva Kiir relieved Chief of the General Staff of south sudan army James Hoth Mai. This came in a presidential decree aired ...

Apr 24 2014Omani non-oil exports to enter African markets ,MENAFN
(MENAFN) A senior official at the Oman Chamber of Commerce and Industry (OCCI) said that the Sultanate is seeking expansion in new African markets, in a time it is looking forward to reduce its ...

Apr 24 2014US Secretary of State Meets Egyptian Intelligence Chief ,Qatar News Agency
(MENAFN - Qatar News Agency) shington April 24 - US Secretary of State John Kerry has met with the Egyptian Intelligence Chief Major General Mohammed Ahmed Fareed al-Tohami who is currently ...

Apr 24 2014Afghan Guard Shoots Dead 3 Foreigners in Hospital ,Qatar News Agency
(MENAFN - Qatar News Agency) Kabul April 24 - Three foreigners including a doctor were shot dead and their colleague wounded when a guard of a private Cure Hospital opened fire on them in the ...

Apr 24 2014Uruguay Public Health Minister Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Montevideo April 24 -Minister of Public Health in Uruguay Maria Susana Mu?iz met here on Thursday with HE qatari ambassador to the republic of Uruguay mohamed hassan ...

Apr 24 2014Egypt's Interim President Receives Phone Call from South African President ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egypt's Interim President Adly Mansour has received a telephone call from President of the Republic of South Africa Jacob Zuma in which they discussed ...

Apr 24 2014King bids to reassure Saudis as MERS deaths hit 85 ,AFP
(MENAFN - AFP) King Abdullah was in the Saudi commercial hub of Jeddah on Thursday in a bid to reassure a worried public as the death toll from the MERS virus hit 85. The Red Sea city has seen a ...

Apr 24 2014QBA strengthens economic ties with Kenya ,MENAFN
(MENAFN) Members of the elite Qatar Businessmen's Association (QBA) stated their willingness to cooperate with their Kenyan peers, strengthening economic ties between Qatar and Kenya, The Peninsula ...

Apr 24 2014Russian Lebanese Foreign Ministers to Discuss Situation ,Qatar News Agency
(MENAFN - Qatar News Agency) scow April 24 - Russian Foreign Minister Sergei Lavrov and his Lebanese counterpart Gebran Bassil will discuss bilateral relations at a meeting in Moscow on Thursday as ...

Apr 24 2014Kuwait inflation edges up 2.96% y/y in March ,Arab Times
(MENAFN - Arab Times) Wait city april 23 (kuna): kuwait's annual record of the general index of consumer prices (inflation) rose in march by 2.96 percent compared with the same month of last year ...

(MENAFN Press) The events in Ukraine have had a limited impact on MENA markets. Despite the Dubai index sliding 1.5%, trading volumes remained healthy. Quarterly corporate earnings results released ...


Click to Apply



Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Investment Game
Economic Calendar
Financial Glossary

Portfolio Tracker


Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help