“This is expected as the government is pushing availability of housing to Saudi nationals both through developing affordable housing, and issuing varies finance/mortgage schemes to facilitate loans,” Dana Salbak, an associate at JLL, told Zawya in emailed comments.
In 2018, the Saudi government introduced several initiatives aimed at boosting home ownership among Saudi citizens, Salbak said.
“Among these was launching a SAR (Saudi Arabian riyal) 120 billion mortgage market plan that targets raising home ownership to 60 percent by 2020 and 70 percent by 2030," she said.
"The program includes a scheme of SAR 18 billion loan guarantee along with a down payment support program of SAR 12.5 billion,” she added.
As for corporates, real estate loans by banks reached 98.86 billion Saudi riyals in 2018, up from 90.06 billion Saudi riyals in 2017, according to SAMA figures. While loans by finance companies reached 2.79 billion Saudi riyals in 2018 in comparison to 2.56 billion Saudi riyals in 2017.
Last year, the Saudi Real Estate Development Fund (REDF) along with the ministry of housing launched ‘Sakani II’, an initiative that targets delivering 300,000 residential products in Saudi Arabia.
These programmes were viewed as “positive steps towards helping Saudis own their first home” and boosting the residential property market in the kingdom, according to JLL’s 2018 Year in Review report.
“It remains pivotal, however, to encourage private sector participation in the development of housing,” the report said.
“Already this is being stimulated by the White Land Tax introduced in 2017, which was designed to unlock the private sector land bank and boost construction activity,” it added.
Other incentives include government land for development, and amending legislation to allow for increased floor area ratio, which would raise residential density, the report said.
Earlier this year, the CEO of Saudi Arabia’s largest property developer Dar Al Arkan Real Estate Development told Zawya that he expects the kingdom’s property market to return to growth, but said that providing financing for the average citizen remains crucial. (Read more here)
(Reporting by Nada Al Rifai; Editing by Michael Fahy)
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