Nationals' homeownership in Saudi likely at 52% by 2020
Saudi Real Estate Refinance Company will look to meet demand for property funding in the kingdom, which is expected to hit $133bn by 2026
Saudi Arabia's sovereign wealth fund has formed a company to increase the rate of homeownership by nationals to 52% by 2020.
The Public Investment Fund (PIF) announced the establishment of the Saudi Real Estate Refinance Company (SRC), which would work to improve the performance of the kingdom's real estate sector, as well as its contribution to the country's gross domestic product (GDP).
Demand for property finance in the kingdom is expected to increase from $74.7bn (SAR280bn) in 2017 to $133.3bn (SAR500bn) in 2026.
SRC has been launched in partnership with the Ministry of Housing and under the chairmanship of the Minister of Housing, Majed al-Hoqail.
The firm is expected to refinance up to $20bn (SAR75bn) in the kingdom's real estate sector over the next five years.
As part of its mandate, the company "will act as an intermediary access point for investors, aligning the liquidity, capital, and risk management requirements of real estate mortgage companies, with the risk acceptability and return on equity to meet investor targets".
Saudi's state news agency, SPA, reported: "[The firm will] create stability and growth in the kingdom’s housing sector by injecting liquidity into the secondary mortgage market, improving standards, and facilitating access to local and international financing sources.
"SRC will adopt a strategy of acquiring mortgage funds to increase financial capabilities and broaden the activities of real estate financing companies, [and] will also work on linking the investment capital of foreign and local investors with the range of opportunities available in the kingdom’s growing housing market."
Additionally, SRC would also issue securities and support short- and long-term real estate mortgage contracts, SPA added.