Saudi Arabia’s real estate loans hit $226bn, fueled by retail and corporate demand 

Saudi Arabia’s real estate loans hit $226bn, fueled by retail and corporate demand 
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Updated 06 December 2024
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Saudi Arabia’s real estate loans hit $226bn, fueled by retail and corporate demand 

Saudi Arabia’s real estate loans hit $226bn, fueled by retail and corporate demand 

RIYADH: Saudi banks’ real estate loans surged to a record SR846.48 billion ($225.73 billion) in the third quarter of 2024, marking a 13.29 percent annual increase, official data showed. 

Data from the Saudi Central Bank, also known as SAMA, indicated that this growth was driven by both retail and corporate lending, with corporate loans experiencing a 22 percent increase to reach SR189.6 billion.  

Lending to individuals made up the lion’s share, accounting for 78 percent of the total at SR656.88 billion, reflecting an annual growth rate of 11.02 percent. 

Real estate loans now comprise 29.67 percent of Saudi banks’ total loan portfolio, which stood at SR2.85 trillion by the end of the third quarter.  

The sector’s unprecedented expansion is underpinned by government-backed initiatives under Vision 2030, which aim to diversify the economy and address the Kingdom’s growing housing demand.  

A pivotal regulatory milestone came in 2018, when the Saudi Central Bank increased the maximum loan-to-value ratio for first-time homebuyers from 85 percent to 90 percent. 

This strategic move was designed to stimulate mortgage lending, making homeownership more accessible to Saudi citizens while aligning with the Kingdom’s broader economic reform plans.  

By enabling more citizens to secure financing for their first homes, the initiative directly supported the national housing strategy, which aims to boost homeownership rates and expand housing options across the country. 

SAMA emphasized maintaining financial stability, ensuring that this policy shift would not compromise the resilience of the banking sector or lead to unsustainable lending practices. 

Another factor supporting the real estate sector’s growth is recent monetary easing. After two years of aggressive rate hikes to curb inflation, SAMA lowered interest rates by 50 basis points in September and another 25 basis points in November, mirroring the US Federal Reserve’s monetary policy. 

These cuts have made borrowing cheaper, spurring demand for real estate loans.  

However, this surge in demand has a dual effect. While it boosts credit uptake, it also exerts upward pressure on housing prices, contributing to inflation. 

Saudi Arabia’s annual inflation rate reached 1.9 percent in October, driven primarily by higher housing costs, according to the General Authority for Statistics. 

Despite this rise, the Kingdom’s inflation remains among the lowest in the Middle East, underscoring the efficacy of its economic stabilization strategies and its resilience against global inflationary pressures. 

New retail mortgages highest in 21 months  

Saudi banks issued SR8.14 billion in new residential mortgages in October, marking the highest monthly figure in 21 months and a 20.33 percent increase from October last year. 

The capital, Riyadh, has emerged as a focal point of this surge, fueled by robust population and employment growth that has intensified demand for housing, with new properties struggling to keep pace.  

Of the total residential loans in October, SR4.83 billion, or 59.3 percent, was directed toward purchasing houses, while 35 percent was allocated to apartments and 5.6 percent to land.  

Apartment financing saw the most significant annual growth, surging 47 percent year on year to SR2.86 billion, followed by land financing at 24.8 percent and house loans at 8.37 percent.  

For the third quarter of 2024, the value of new residential mortgages reached SR20.49 billion, reflecting an 11.34 percent increase compared to the same period last year. This growth was largely driven by demand for apartments, with lending in this segment soaring 58.76 percent year-on-year to SR7.25 billion.  

While lending for land rose 19.16 percent to SR1.19 billion during the quarter, loans for houses declined 6.13 percent to SR12.06 billion. 

The increasing prominence of apartment financing highlights a shift in Saudi Arabia’s housing market, reflecting evolving demographics and lifestyle preferences. Apartments appeal to expatriates and smaller families while also addressing affordability concerns.  

According to S&P Global, population growth, averaging 3.3 percent annually through 2027, and a surge in expatriate inflows are fueling demand, particularly in Riyadh. 

This factor, coupled with job opportunities, is outpacing the delivery of new housing units.

According to JLL’s KSA market dynamics report for the first half of 2024, 16,200 units were added in Riyadh and 11,300 in Jeddah during this period, with another 16,000 units expected in both cities by the end of the year. 

However, despite this growth, supply constraints continue to push prices higher. High construction costs and competition with Vision 2030 projects are limiting housing affordability.

Additionally, Saudi Arabia’s real estate market is navigating regulatory changes to attract foreign direct investment. While FDI inflows currently average 2 percent of GDP, they are expected to grow as reforms unfold, including new residency visa options tied to real estate investments, according to S&P Global. 

As mortgage infrastructure matures, spearheaded by entities like the Saudi Real Estate Refinance Co., the market is poised for increased liquidity and growth.

Secondary mortgage market

Saudi Arabia is embarking on a transformative journey to establish a secondary mortgage market, a move set to redefine the Kingdom’s housing and financial sectors.

With two major agreements in place, the country is strategically aligning global expertise with local execution to ensure liquidity in housing finance, boost homeownership, and foster economic diversification in line with Vision 2030.

In a landmark development, the Saudi Real Estate Refinance Co., a subsidiary of the Public Investment Fund, signed a memorandum of understanding with BlackRock, the world’s largest asset manager.

The agreement, finalized during a high-profile visit by Majid Al-Hogail, minister of municipal and rural affairs and housing, to the US, underscores the Kingdom’s commitment to leveraging global expertise to develop its mortgage finance ecosystem.

The partnership with BlackRock is expected to play a pivotal role in creating a functional secondary mortgage market by laying the groundwork for mortgage-backed securities.

BlackRock’s extensive knowledge of global financial markets will be instrumental in structuring these securities, designed to improve market liquidity by enabling banks to sell bundled mortgage loans to investors.

This influx of liquidity is anticipated to reduce borrowing costs for Saudi families, making homeownership more affordable.

Robert Kapito, BlackRock’s president, described the collaboration as a key step in aligning Saudi Arabia’s real estate finance market with international capital markets. He emphasized the potential for this initiative to not only support local housing goals but also attract global investment.

Meanwhile, SRC has also signed a separate agreement with Al-Ahli Bank and the Real Estate Development Fund to operationalize the secondary mortgage market at a local level.

This tripartite partnership focuses on creating and refinancing mortgage portfolios, ensuring the housing finance market has continuous access to funding.

The initiative is also set to fast-track the issuance of mortgage-backed securities in the domestic market, laying a solid foundation for sustainable growth in the sector.

As mortgage origination grows, so does the need for a secondary market to manage liquidity effectively.

SRC CEO Majeed Al-Abduljabbar described the partnership with Al-Ahli Bank as a critical step in addressing these challenges. By enabling banks to securitize mortgages and sell them as MBS, the initiative will enhance liquidity, reduce financing costs, and expand housing options for citizens.

These partnerships come at a pivotal time for the Kingdom, where the housing sector is central to Vision 2030’s objectives of raising homeownership rates to 70 percent and reducing economic reliance on oil revenues.

By integrating the real estate finance sector into global capital markets, Saudi Arabia is not only ensuring affordable housing but also positioning itself as a regional leader in innovative financial solutions.


Red Sea Global to fund new destinations through residential sales proceeds: CFO

Red Sea Global to fund new destinations through residential sales proceeds: CFO
Updated 13 sec ago
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Red Sea Global to fund new destinations through residential sales proceeds: CFO

Red Sea Global to fund new destinations through residential sales proceeds: CFO

RIYADH: Saudi Arabia’s Red Sea Global is leveraging the proceeds from its residential sales to finance upcoming projects along its coastal properties, according to the company’s top executive.

In an interview with Arab News during the Public Investment Fund’s Private Sector Forum, RSG’s Group Chief Financial Officer Martin Greenslade disclosed that the company intends to sell around 300 residences in its Red Sea development, along with a similar number at its wellness-focused destination, AMAALA.

“Those residences are available to anyone to purchase, both Saudis and international buyers. We’ve already sold some of them, some of those have been reserved, and the pricing for that is anywhere up from SR5 million ($1.3 million) upward. There’s something to suit every taste and every budget,” Greenslade said.

The CFO added that revenue from these sales serves as a critical source of funding for RSG’s long-term plans. “This external investment, as people buy those residences, is an important driver of funding for us,” he said.

Infrastructure development

RSG has already invested more than $20 billion into its flagship projects, with an equal or greater amount expected to be invested in future developments, according to the company’s top official.

Initial funding for infrastructure was provided by the Saudi government and the sovereign wealth fund, with additional support from bank loans and public-private partnerships for key utilities, such as solar energy and water treatment.

To finance the Red Sea project, RSG secured a SR14 billion green financing facility in 2021, which has been fully utilized to support the final stages of development. Greenslade emphasized that future funding will continue to come from a combination of residential sales, bank loans, and external investments.

“We are actively exploring co-investment opportunities, similar to our partnerships for the Four Seasons and Jumeirah hotels, where we have sold 50 percent stakes to external investors,” he noted.

Growing tourism and occupancy targets

Despite limited international flight options, with service currently only available from Dubai, RSG has seen strong demand from domestic and Gulf Cooperation Council tourists.

Five hotels have already opened, with 11 more scheduled to launch this year on Shura, the main hub island of The Red Sea development.

Although the company has not released specific occupancy figures, Greenslade expects the numbers to align with global luxury destinations over time, aiming to reach the 70 percent occupancy benchmark.

“The full launch of the destination is planned for the end of 2025, once all hotels are operational,” he explained. “We anticipate stronger occupancy rates as international connectivity improves, given that global travelers typically stay longer.”

Investment opportunities

“We’ve led to over SR20 billion of contracts, 70 percent of that has gone to Saudi based organizations,” he said.

The company is inviting businesses to establish operations in the Red Sea area, spanning retail, hospitality, and entertainment sectors.

Entrepreneurs with unique tourism-related offerings are encouraged to invest, though Greenslade underlined that quality control and operational expertise are key criteria for entry.

“Yes, we’re looking for entrepreneurs, we’re looking for people who want to bring, who believe they have, something to bring to the tourists that will be coming to our destination,” he said.

“We have created our own seaplane and diving companies due to initial service gaps, but we are actively training and hiring local talent, with over 500 graduates from our vocational programs already employed,” he added.

Environmental sustainability is a core focus of RSG’s strategy. The company plans to plant and restore 50 million mangroves over the next five years and has mapped 180 coral reefs using artificial intelligence to ensure ecological preservation.

The Red Sea destination is entirely solar-powered, with electric vehicles and water sports helping to maintain a carbon-neutral footprint.

Moving forward, RSG will continue to incorporate green financing into its funding strategy, further reinforcing its commitment to regenerative tourism.

“The savings from our solar farms alone will prevent over a million tonnes of carbon dioxide emissions annually,” Greenslade emphasized.

 


Saudi nationals make up 70% of Red Sea Global workforce: top official

Saudi nationals make up 70% of Red Sea Global workforce: top official
Updated 13 February 2025
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Saudi nationals make up 70% of Red Sea Global workforce: top official

Saudi nationals make up 70% of Red Sea Global workforce: top official

RIYADH: Saudi Arabia’s multi-project developer Red Sea Global currently employs 70 percent of its workforce from the local population, according to the firm’s group chief financial officer.

Speaking at the PIF’s Private Sector Forum in Riyadh on Feb.13, Martin Greenslade said that the Kingdom’s leisure tourism industry witnessed substantial growth in recent years, as the country welcomed 17.5 million tourists in 2024, representing a rise of 656 percent compared to 2019.

These developments align with Saudi Arabia’s National Tourism Strategy, which aims to attract 150 million tourists by the end of this decade.

“In our company, we are around 70 percent Saudis. When it comes to the hotels and the workforce, that is something we are scaling rapidly by providing opportunities to as many people as we can,” said Greenslade.

He added: “Saudi Arabia is witnessing a massively growing environment of leisure tourism. Over the last five years, leisure tourists increased in Saudi Arabia by over 600 percent, 17.5 million visitors a year, just for leisure tourism. If we add all the other tourists, we are well over 100 million. So, we are on a sweet spot of growth.”

Regarding the number of visitors to the Red Sea, Greenslade revealed that the figures are still in the thousands as hotels are currently under development, adding that they will grow significantly in the coming years.

He added that 92 percent of visitors to the Red Sea are from the Gulf Cooperation Council region, with the majority being Saudi citizens.

“Right now, we only have these few hotels opened, and they have a very limited number of keys. So, the number of tourists is in the thousands. And they have largely come from the Gulf Cooperation Council. So, there have been some challenges with international tourism; the events in Gaza are challenging. But we are putting on more international flights,” said Greenslade.

He added that Shura Island, which falls within the Red Sea, will see the opening of 11 hotels in 2025, while seven hotels will be opened in AMAALA this year.

During the talk, the Red Sea official added that the company has paid over $20 billion in contracts to suppliers, and around 70 percent of that has gone to Saudi-based organizations.

Greenslade said about the potential spending in 2025: “I do not want to give the exact amount this year, but we are spending billions of dollars a year on developing this destination. Some of those are funded through debt financing and some of those from the PIF.”

Greenslade added that developing the residential side of the Red Sea is very important, as it is one of the best ways to attract private investments.

He highlighted that individuals wishing to consider the Red Sea a second home can also buy a residential unit.

“When you finish the visit to Red Sea, you feel so sad to leave, and if you never want to leave, you can buy your own residence,” said Greenslade.

He mentioned that tourists visiting the Red Sea will have an unforgettable experience.

“If you want to go to somewhere truly breathtaking, somewhere iconic, somewhere very different from anywhere else on earth, you book a ticket to the Red Sea. You would fly and land at the brand-new airport. The airport in the Red Sea has a runway large enough to take any plane,” said Greenslade.

He added: “Tourists visiting the Red Sea will get an electric vehicle to reach the seaplane terminal or boat where they will be guided to an island. These islands are incredible, the corals are fantastic, the snorkeling is amazing.”

The official further said that the company is eyeing to plant 50 million mangroves in the Red Sea project, aimed at ensuring sustainability.

He also highlighted that resorts in the Red Sea are fully powered using solar energy, and the same initiative will also be taken in AMAALA.

“We want to redefine how tourism interacts with the environment. We call it regenerative tourism. Mangroves are very important. We are looking to plant and preserve around 50 million mangroves. Mangroves are extremely important to coastal protection and for the wildlife that settles in and around it,” said Greenslade.

He added: “We are aiming to increase biodiversity by 30 percent. So, we have got an enormous nursery, a million sq. feet building, one of the largest nurseries in the world. We will see some 30 million plants go through there.”


Saudi Arabia’s NEOM partners with Paradromics to transform neurological care

Saudi Arabia’s NEOM partners with Paradromics to transform neurological care
Updated 13 February 2025
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Saudi Arabia’s NEOM partners with Paradromics to transform neurological care

Saudi Arabia’s NEOM partners with Paradromics to transform neurological care

JEDDAH: Saudi Arabia’s $500 billion NEOM project is making a major investment in Paradromics, a pioneering company in brain-computer interface technology, to drive healthcare innovations.

The partnership, announced on Feb. 12, with the American firm aims to advance BCI therapies focused on restoring neurological function for individuals with impairments.

As part of the agreement, NEOM will establish a Brain-Computer Interface Center of Excellence. This center will lead groundbreaking clinical research and become a leading hub for BCI-based healthcare in the MENA region and beyond.

This investment aligns with Saudi Arabia’s Health Sector Transformation Program, launched in 2021, which seeks to create a more efficient, integrated healthcare system.

The program prioritizes innovation, financial sustainability, disease prevention, and broader access to healthcare services. It also focuses on expanding e-health services and digital solutions to improve care quality and meet international standards.

Led by the NEOM Investment Fund, the partnership will accelerate the development of high-data rate BCI technology, aimed at enhancing movement, communication, and cognitive functions for individuals affected by neurological conditions.

Matt Angle, founder and CEO of Paradromics said that the collaboration marks a pivotal moment for Paradromics and the broader BCI industry.

“NEOM and Paradromics both have expansive visions for the future of mental health that are highly aligned. Working together, we can accelerate the rate of innovation in BCI and expand access to impactful BCI-based therapies,” Angle said.

Majid Mufti, CEO of NEOM Investment Fund, said that they “at NIF are committed to enabling NEOM’s bold vision of redefining the future of healthcare by investing in transformative technologies that push boundaries and address humanity’s toughest challenges.”

“Paradromics was selected as a strategic partner for their groundbreaking advancements in BCIs and our shared mission of shaping industries, solving critical challenges and driving meaningful impact.” Mufti added.

Mahmoud Al-Yamany, head of NEOM’s health and well-being sector, stated that the partnership with Paradromics marks a significant advancement in addressing the critical needs of individuals with motor paralysis, speech impairments, and other debilitating conditions.


Saudi low-cost carrier flynas to take delivery of over 100 Airbus planes by 2030

Saudi low-cost carrier flynas to take delivery of over 100 Airbus planes by 2030
Updated 13 February 2025
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Saudi low-cost carrier flynas to take delivery of over 100 Airbus planes by 2030

Saudi low-cost carrier flynas to take delivery of over 100 Airbus planes by 2030

JEDDAH: Saudi low-cost carrier flynas expects to receive more than 100 Airbus aircraft over the next five years, part of its broader deal for 280 Airbus jets, as it expands its fleet to meet growth targets. 

The announcement coincided with a visit from Airbus senior management to flynas’ headquarters in Riyadh. 

The airline aims to operate over 160 aircraft by 2030, with its 280-plane order — worth more than SR161 billion ($43 billion) — making it the largest holder of single-aisle aircraft purchase orders in the Middle East. 

This comes amid a growing backlog of aircraft orders in the aviation industry, with manufacturers like Boeing reducing delivery schedules for 2025, impacting Gulf carriers that have had to delay their launches.

Dubai-based Emirates has been hit hard as Boeing’s 777X faces major delays, with deliveries now expected no sooner than 2027. 

“We value the visit of the Airbus senior management, which reflects the position of flynas as a leading Saudi carrier at the global level and also reflects the importance of our long-term partnership that has strengthened the contribution of flynas to achieving national goals in the aviation industry,” said Bander Al-Muhanna, CEO and managing director of flynas. 

He noted that flynas’ partnership with Airbus began at its inception and strengthened in 2016 with an order for 120 aircraft. The collaboration reached a new level in 2024 with an agreement to purchase 160 Airbus A320 and A330 wide-body jets. 

The expansion aligns with Saudi Arabia’s National Civil Aviation Strategy, which aims to connect the Kingdom with 250 international destinations, accommodate 330 million passengers annually, and attract 150 million tourists by 2030. 

The initiative also supports the Pilgrims Experience Program, designed to facilitate access to the Two Holy Mosques, the company said in a press release. 

The Airbus delegation’s visit also marked flynas receiving a new Airbus A320neo last week — the first delivery of the year — bringing its fleet of the models to 54 aircraft. 

During their visit, Airbus executives toured flynas’ headquarters and reviewed the airline’s latest aviation innovations. They also met with senior officials from the Saudi airline to discuss ways to strengthen their long-term partnership. 

Saudi Arabia has been pushing to expand its aviation sector under Vision 2030, with national carriers ramping up fleet expansions to meet the Kingdom’s growing travel and tourism targets. 


Pakistan’s HBL Microfinance Bank, IFC sign $80 million risk sharing agreement

Pakistan’s HBL Microfinance Bank, IFC sign $80 million risk sharing agreement
Updated 13 February 2025
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Pakistan’s HBL Microfinance Bank, IFC sign $80 million risk sharing agreement

Pakistan’s HBL Microfinance Bank, IFC sign $80 million risk sharing agreement
  • Facility will allow HBL MfB to share 50 percent of risk on microfinance loan portfolio of up to $80 million with IFC on an unfunded basis
  • Collaboration aims to enhance access to finance for smallholder farmers, microenterprises across the country, with focus on women

KARACHI: HBL Microfinance Bank (HBL MfB) has signed a Risk Sharing Agreement (RSA) with the International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets.
The facility, which is supported by the Private Sector Window of the Global Agriculture and Food Security Program (GAFSP), will allow HBL MfB to share 50 percent of the risk on its microfinance loan portfolio of up to $80 million with IFC on an unfunded basis. The collaboration aims to enhance access to finance for smallholder farmers and microenterprises across the country, with a strong focus on women entrepreneurs.
“This RSA is another milestone, reinforcing the Bank’s legacy of innovation and leadership in addressing the evolving financial needs of underserved communities,” HBL said in a statement. 
“By being the first microfinance bank to establish an agreement on such a scale, HBL MfB is not only pushing boundaries but also redefining industry standards, ensuring that microfinance remains a catalyst for empowerment and economic growth.”
HBL said the RSA exemplified the bank’s approach toward leveraging strategic partnerships to strengthen financial resilience, expand lending capabilities, and maintain sustainable growth.
“This partnership with IFC is a testament to our commitment to financial inclusion. The facility serves as a replicable model for strategic partnerships that mitigate market challenges while driving sustainable development,” Amir Khan, President and CEO HBL Microfinance Bank, said in a statement.
“By pioneering this Risk Sharing Facility in the microfinance sector, we are ensuring that underserved segments of the society — especially small business owners and farmers, particularly women, have access to the capital they need to thrive. We are thankful to IFC for their trust in us and look forward to the growth and progress it will bring for underserved Pakistanis.”
Momina Aijazuddin, Regional Head of Financial Institutions Group at IFC, said boosting access to finance, especially for smallholder farmers, small businesses and women, could be a “gamechanger” in Pakistan. 
“With this in mind, IFC is excited to support this pioneering risk sharing facility which aims to de-risk HBL MfB’s on-lending activity to its microfinance clients and support critical growth opportunities in agriculture, entrepreneurship, and women’s empowerment,” Aijazuddin said. 
“This agreement will accelerate financial inclusion, and further HBL Microfinance Bank’s mission of creating a more inclusive and resilient financial ecosystem in Pakistan.”
Despite challenging macroeconomic conditions, microfinance banks (MFBs) have continued to expand their outreach to the low-income population of Pakistan. Although MFBs account for only 1.3 percent of total financial sector assets, they have a broad customer base. Over the past five years, MFBs’ total assets grew by an average of 19.1 percent annually, according to government data.