"Saudi Arabia faces a shortage of housing as its youth population is on the increase. There is a huge gap between what is available and what is required," Khaled Mohammed Al-Aboodi, CEO and general manager of ICD, said in an interview with Arab News.
To help fill the housing gap, ICD established Ewaan International Housing Co. with strong ambitions to evolve quickly as a major local and regional player in the real estate market. "There is a dire shortage of housing units in the Kingdom. About 150,000 new housing units are needed every year in Saudi Arabia, so our aim is to create landmark property-based investment portfolios in the Kingdom," Al-Aboodi said.
He said ICD was initiator and one of the founders of Ewaan, which comes as part of its objectives in supporting the private sector. "The first priority of Ewaan is to construct housing complexes in various parts in the Kingdom for the middle-income segments and develop houses in the most efficient and effective way," he added.
Ewaan has already begun working on its first project for over 2,000 housing units in Jeddah, Al-Aboodi said.
"After Jeddah, we will move to Riyadh. Ewaan had already acquired land for the project. After this project it will move to other parts of the Kingdom," he said.
"Our projects will not be affected much as we are focusing on middle-income families and also because of government support, the housing units will be affordable," he added.
Al-Aboodi said Ewaan plans to change the real estate perception and understanding in the Kingdom through opening new channels for investors, especially with the region experiencing high liquidity and facing limited investment channels.
Al-Aboodi also spoke about making available mortgage finance for prospective buyers. "We are in the process of setting up a mortgage finance company and have already completed a feasibility study for the same," he said. "The mortgage finance company will be launched soon and will enable people to purchase houses," he said, adding the capital of the mortgage finance company would be SR2 billion.
"As the government is in the final stage of approving the mortgage finance law, we will go ahead with our plans to create the company," he added.
The ICD gives Saudi investors the ability to access international financial markets and the ICD's network of relations with many financial companies across the Islamic world.
He said ICD had entered into a joint venture agreement with Capitas Group, a US financial services firm specializing in developing and managing Shariah-compliant finance products, to form a management company dedicated to the global development of Shariah-compliant mortgage finance industry.
Al-Aboodi said ICD is in the final stage of launching a global housing fund of $500 million which will be placed in different member countries. This fund will invest in ICD member countries in collaboration with local developers.
He said ICD research showed significant demand for middle-income housing exists in all member countries.
There are 56 IDB member countries - mostly concentrated in the Middle East, Africa and Central Asia. Al-Aboodi said the member countries had 22 percent of global population but only 7 percent of economic output and a large portion of their population classified as low and middle-income. He said about 40 percent (620 million) of the population designated as middle-income in 2009 is as large as the total population of the G7 countries combined.
About 14 million middle-income housing units will be demanded in IDB member countries over the next five years, Al-Aboodi said.
He said ICD was working with member countries to support SMEs (small and medium enterprises) through line of financing. This sector is very important for the economy.
He said ICD was working to launch first a Saudi SME fund of SR1 billion by the end of this year after getting necessary approvals from the board and the Capital Market Authority (CMA). This fund will invest in SMEs, he said.
The total projects approved by ICD by end of 1430H reached 184 with amounts exceeding $1.56 billion.
Al-Aboodi said based on our experience this fund would be duplicated in other member countries.
The ICD recently signed a deal to develop SMEs in Libya. It will be working with Libya's National Council for Economic Development (NCED) to implement the deal.
He said ICD has taken an initiative to create special industrial zones in member countries and has signed memorandum of understandings (MoUs) with Mauritania and Yemen to explore possibilities of establishing and developing such zones.
Al-Aboodi said the year 2008 witnessed the most serious crisis to hit the world economy since the Great Depression in the 1930s. The ICD member countries could not escape the fallout from the global crisis.
"Despite the current global meltdown, the fundamentals of ICD's business were sound and the underlying demand drivers remained intact," he said.
