SR 1 billion housing deal unveiled at Riyadh expo

Property developers and investors need more solid information on available opportunities in the Kingdom and ways and means of securing them, a major real estate show in Riyadh was told yesterday.
A number of financiers and developers specialized in the field say that the Saudi real estate market is expected to grow by 20 percent this year.
Housing Minister Showisha Al-Duwaihi inaugurated the Real Estate and Housing and Urban Development (Ristx) show at the Riyadh Exhibition and Convention Center.
Speaking at the event, the minister confirmed that his ministry had signed an SR 1 billion contract with a private sector national company to prepare the infrastructure for the construction of 7,000 housing units on a 5 million sq m land in Riyadh.
According to the minister, the project, first of its kind, located on the Othman bin Affan road in the north-west of King Khalid International Airport in Riyadh.
The project is being implemented following royal directive to allocate lands for the housing ministry to help citizens with loans to build homes.
The project which is to be completed within 24 months, will provide water power, sanitation, wastewater, sidewalks for pedestrians on an area of 350,00 sq m. Provisions have also been made for schools for boys and girls, mosques and parks.
At the show, the exhibitors expressed their satisfaction for the support given by the public sector to the private sector in the development of properties throughout the Kingdom.
Over the past few years, around 50 new real estate developers have been licensed in the Kingdom to address needs of the construction pipeline currently estimated to be worth SR 2.35 trillion, with the residential, education, health care and industrial sectors as focal areas.
It was pointed out that this year will witness a boom in the real estate market, as housing projects with affordable prices for citizens with limited income will be implemented, stressing that growth in this sector will exceed 20 percent.
Another study by Banque Saudi Fransi showed that public and private construction companies will need to build 275,000 housing units annually until 2015 to meet the demand for 1.65 million new houses.
"We are very optimistic about this year. We think that mortgage finance will stimulate the sector, especially in the aftermath of the regulations issued last July and the draft of Saudi Arabian Monetary Agency (SAMA) that was issued in November, " an exhibitor said.
Injaz Development Co., a leading real estate developer in the Kingdom, is highlighting some of the country’s strategic property segments at the show .
Its key projects such as its Al-Gamra and Al-Marina developments were the focus of the event.
“While there is no doubt that Saudi Arabia represents one of the most vibrant property markets in the Arab region, interested developers and investors need to have solid information on available opportunities and how to go about securing them,” said Omar Al-Kadi, CEO and MD, Injaz Development Co.
He said: “Injaz considers Restatex an ideal platform to share and acquire expertise and best practices while introducing our own projects to a broader regional and global audience. It is also an exciting channel to strengthen ties and form partnerships with market players.”
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 - a shortage of 225,000 residential units.
Established by a Royal Decree No.(23), dated 11-6-1974H. Real Estate Development Fund (REDF) started its activities at the beginning of fiscal year 1975 to provide loans to citizens to help them construct their own homes and 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 3976 cities, villages and remote areas all over the Kingdom.
“The Kingdom's real estate market is the largest in the region and it is estimated at SR 55 billion and its smooth development would boost the country's economy,” Hamad Al-Shuwair, chairman of the National Real Estate Committee of the Council of Saudi Chambers, said.
He also said that around 60 percent of the Saudi population is below the age of 18 years and the country would need a large number of houses when these youths have families after their marriage.
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.