Jul 28 2012
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New mortgage law to propel real estate investment
In the wake of the new mortgage law, real estate experts and banking officials say that a range of facilities will now be available to investors in a bid to attract more foreign investment. They told Arab News that such investments would support the national economy and revive related sectors including construction.
"Competition will be tough since the new mortgage law ensures the fairness of the transaction and the safety of the financial system," one of them said.
"After the implementation of mortgage law, we expect Saudi market to witness an increase in the amount of foreign investment to 70 percent. Many real estate companies have been looking to invest in the Saudi real estate market. However, new Emirati, Japanese, and Korean companies would join the Saudi real estate market very soon. I believe that Makkah is the most demanded residential area where a Korean company will start the building of five residential projects very soon," said Aziza Mansour, chairman of the board of Aziza Mansour Co. Ltd.
She added: "I expect a tough competition in Saudi real estate market between both local and foreign investors. I believe that foreign investors will win the competition due to several reasons. Actually, foreign investments always follow a flexible strategy, which makes both land's owner and customers satisfied."
According to Mansour, banks would face many obstacles that prevent them from dominating Saudi real estate sector.
Anas Al-Marhoumi, banking expert, stated that players in the Saudi real estate market will increase where both banks and foreign companies will compete in addition to local real estate companies.
"Such tough competition will benefit the residents, where banks will try its best to attract large number of clients by decreasing the profits and set a flexible law to facilitate repayment of the loan," he said.
Al-Marhoumi added: "The entering of foreign real estate companies will change the style of the Saudi apartments too."
According to statistics, the need for residential units in the Saudi real estate market over the next five years will gradually increase.
"Saudi Arabia will be a top investment area over coming two or three years as billions of riyals will be invested in the Saudi real estate sector, he said.
"If the opportunity given for partnerships between national and foreign companies, we will find success in the formulation of strategies and new real estate prices that will be subjected to competition in the supply and demand," he added.
"The issuance of mortgage law might change the specifications of the Saudi real estate market. I believe that multiple alliances between companies, real estate development and finance companies will be established to provide new standards in the market," said Turki Fadaak, director of research and advisory at Albilad Investment Co.
"These alliances will try to offer products and services, better than the services provided by banks, aiming to acquire a larger share of customers," he added.
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