Supreme body needed for Kingdom’s real estate sector

In view of the Kingdom’s growing housing needs, the Council of Saudi Chamber (CSC) called for the establishment of a supreme body to manage the real estate sector in the Kingdom. It also urged the government to make suitable arrangements to build 500,000 housing units to cater to the increasing population.
The call was made at a meeting of the National Real Estate Council (NREC) of the CSC.
“The request is being made in the wake of recent developments in the real estate sector,” said NREC Chairman Hamad Al-Shuweir. “These include the setting up of a separate ministry for housing, supplementary allocations offered through royal decrees to the Real Estate Development Fund and the interest that private investors show in real estate financing.”
Such an authority would attend to the needs of the landowners, consumers and local and foreign investors, he added. Such an authority could also manage the interests of the private and public sector for the benefit of the people.
A higher authority could frame regulations for this fast developing sector and be a window for the real estate industry of the Kingdom to both local and international markets. It could also reduce the workload of the governmental bodies such as the Ministries of Justice, Municipal and Rural Affairs, Commerce and Industry and Finance and the Saudi Arabia Monetary Agency, Al-Shuweir noted.
The CSC has entrusted the NREC with the task of formulating regulations for the real estate industry, promoting investments for the real estate sector in the Kingdom, recruiting professionals for the trade and trying to reaffirm the image of the industry to investors and consumers alike.
Recently, the Kingdom approved a state mortgage law.
According to a recent study, the Kingdom needs 300,000 residential units every year over the next 15 years, a total of 4.5 million. In Riyadh, the lack of affordable homes is especially acute. There is a shortage of 225,000 residential units.
The Real Estate Development Fund (REDF) started its activities at the beginning of fiscal year 1975 to provide loans to citizens and help them construct their own homes as well as other properties for investment purposes. It commenced operations with a capital of SR 250 million and later increased to SR 82,769 million.
During the first 25 years from its inception, REDF has granted 443,842 private loans as well as 2,488 investment loans, with a total value of SR 120,144 million, resulting in the construction of 555,866 residential units. REDF’s services have so far reached 3,976 cities, villages and remote areas all over the Kingdom.
Over the last few years, the Kingdom’s real estate business has been stagnating, in anticipation of a proper mortgage scheme. “The Kingdom’s real estate market is the largest in the region. It is estimated at SR 55 billion and its smooth development would boost the country’s economy,” Al-Shuwair added. He also said that around 60 percent of the Saudi population is below the age of 18 and the country would need a large number of houses when these youths get married and have families.
Speaking about the funding of the real estate sector, Al-Shuwair said that there is no cause for hesitation for financial institutions in providing funds to the real estate business since the the state mortgage scheme would provide the necessary security for their investments in the sector.