Emaar calls for KSA mortgage law

A mortgage law in KSA could double or triples sales, according to Emaar in KSA.

Emaar Middle East could “double or triple” the number of sales at its Al Khobar Lakes project if the Saudi Arabian government introduces its proposed mortgage law, according to a senior Emaar source.

“We have a lot of customers coming to Al Khobar Lakes sales centre, in fact there is often a queue of customers, but when it comes to closing deals very few have the financing power to close,” Emaar’s head of sales and marketing Akram Omar told Construction Week.

“Until today 100% of our customers are relying on their own savings and resources. This is really hard for most people and keeps us within a small segment of the market.”

Developers, as well as the Saudi people, have been waiting several years for the government to approve the new mortgage law, which is expected to provide a clear regulatory framework for mortgage lending.

“Now in the market there are some finance options, but the rates are unfair,” says Omar.

“When there is a clear mortgage law in the market it will control the relationship between the financial institutions, the developer and the end user. This triangle will function smoothly under a lot of clear guidelines, now it is not.”

Last year several government officials announced that the law had been approved and would be introduced within 2009. Now industry insiders expect the law to be enacted within the first quarter of 2010; however there has been no confirmation from the government.

“Once…the mortgage law comes out, then Al Khobar Lakes will sell high and prices will inflate and it will look completely different,” said Omar.

“I would expect the number of sales to more than double or treble the number which is happening today.”

The first phase of the Al Khobar Lakes development will cost around US $1.2 billion (SR 4.6 billion) and see the construction of more than 2000 villas near the city of Al Khobar on Saudi Arabia’s Eastern coast.

Construction of the first 242 villas began in September 2008 and construction of a further 232 villas and the grand mosque will start this month. The entire project is expected to be built out by 2015.

Emaar Middle East is a joint venture company between Dubai’s Emaar Properties and Saudi Arabia’s Al Oula Real Estate Development Company.

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