JEDDAH: There are strong indications that commercial banks will increase their real estate financing this year. Last year, banks offered Saudi citizens housing loans amounting to more than SR6 billion, business daily Al-Eqtisadiah reported Wednesday, quoting banking sources.
Official statistics show that only about 38 percent ofSaudis own houses, including the communal ones. Banking sources described thisrate as low compared to the other developed countries, where 65 to 75 percentof the population own houses.
"Most of the banks, if not all, are inclined to expandtheir real estate financing in the light of the increasing demand for housingunits in the Kingdom," said Saad Al-Sheikh, first vice president andsenior economist at the National Commercial Bank.
He said Saudi banks have sufficient liquidity to extend morehousing loans.
Building private houses might not lead to a drop in rents,cautioned Al-Sheikh. "Housing rents will drop only when government realestate projects are completed," he said.
He was confident that the Ministry of Housing's constructionof 500,000 housing units at the cost of SR250 billion would increase the supplyand automatically bring down rents. "It will not be this year or the next.We may probably see results after 2014," he added.
Khaled Al-Othman, chairman of the corporate banking servicesin Al-Jazira Bank, said the demand for houses would annually increase as veryfew Saudis own private homes. He said the young men would usually seek to havetheir private accommodation after marriage.
"It is natural for banks to cater to consumers' needsand increase its real estate financing," he said.
Al-Othman said the demand for real estate units waspromising, judged by the figures of previous years. He said the share of hisbank in real estate financing last year was about 25 percent.
© Arab News 2012
