Under the decree, a board of directors for the Real Estate Development Fund has been formed with the minister of housing as chairman. It has representatives from the ministries of municipality and rural affairs, finance, and economy and planning, and also the Saudi Arabia Monetary Agency (SAMA).
In an exclusive interview with Arab News, Fahad M. Al-Mutawa, chief executive officer of Ewaan Global Residential Co., says the new ministry hopes to find a suitable formula to deal with all the areas of such an important sector. According to him, Saudi Arabia's housing market continues to wrestle with a shortage of supply and mounting demand, which has placed home ownership affordability out of reach of many young Saudis.
Following are the excerpts from the interview:
A: Let us start with Ewaan's overall ambitions from "Alfareeda" Residential Project, which aims to establish a developed residential environment over more than 2,000 housing units within an integrated services project, commensurate with the middle-income class requirements and possibilities. Ewaan aims as well to share in solving problems faced by this level of people because of the difficulty nowadays in owning houses because of the high prices. Since its foundation, Ewaan has worked to provide products that suit capabilities of this level without forgetting the success of the company and its improving profits. The project aims to establish a modern residential environment with the latest services and advancements that would suite and comply with the needs and desires of middle-income people.
A: The requests for acquisitions in the project by the citizens are increased after obtaining the license to sell on the map from the Ministry of Commerce and Industry, and that the company appointed more than one company to do the required construction works in order to ensure quality and speed of the implementation to deliver the units to the owners within the specified time. I take this opportunity to thank the ministry and Jeddah Municipality for awarding the project building permit and for its concerns to develop the infrastructure especially in the north of the city, which is undergoing urbanization, as the development of such projects will undoubtedly ease the pressure on the major cities in terms of traffic offering ready neighborhoods with high infrastructure services, all facilities and high standards of quality required by the city of Jeddah to fit the developmental plans for the entire city in the coming years. These licenses and the starting of construction works represent a great confidence among citizens and investors who are visiting the sales center, which is already established next to the project site to be able to follow the construction stages closely, view the project plans and integrated models for the housing units, and to be aware at the same time of the available funding programs.
A: The Saudi housing industry saw remarkable growth opportunities and became the fastest growing housing industry in the Middle East. Last year's real estate investments were expected to reach around SR1.5 trillion ($400 billion), according to a market research report, "Saudi Arabia Housing Sector Outlook," prepared by RNCOS. The Saudis should choose between paying an average rental cost of 45 percent of their existing income or a monthly mortgage at 41 percent in case they choose to buy on their own. The mortgage condition will certainly be the key to prospective market growth. With this mortgage law, prospective buyers will be integrated in the target market and consequently, the potential of the residential real estate will get bigger in Saudi Arabia.
A: The Royal Decree for the creation of the Ministry of Housing positively came at a very critical time for the real estate sector in the Kingdom, tasked with all housing issues including those previously assigned to the General Housing Authority. The decree further stated that the use of all land is restricted to the purpose for which it has been designated, and sees the transfer of civil service staff working in housing, vacant posts, financial allocations, property, documents and contracts, and everything related to present and future housing projects to the new ministry. Under the decree, a board of directors for the Real Estate Development Fund is formed with the minister of housing as chairman and with representatives from the ministries of municipality and rural affairs, finance, and economy and planning, and the Saudi Arabia Monetary Agency (SAMA). So, we hope the best for the ministry to find a suitable formula to deal with all the actors of such an important sector. Saudi Arabia's housing market continues to wrestle with a shortage of supply and mounting demand, which has placed home ownership affordability out of reach for many young Saudis.
A: The Alfareeda residential project with its unique geographical location in the north of Jeddah will contribute to alleviating the pressure on major cities in terms of traffic, as it is an integrated project comprising 2,088 residential units (villas) on more than one million square meter land, which aims to create a sophisticated residential environment and integrated services in conformity with the middle-income people requirements and capabilities. Alfareeda will provide basic requirements in a rare smooth, calm and comfort manner, in addition to the beautiful external architectural form as a rich addition to the general one and the internal designs completely fitted with the basic requirements of the Saudi environment. Also, Alfareeda project will create a social community that suits the valued social customs in Saudi society, which goes along with one of the most important real estate development trends in the Kingdom.
A: I believe that the long-awaited mortgage law could be enforced in Saudi Arabia in 2012 after a series of delays, as the enactment of the mortgage law will act as a catalyst for the domestic real estate sector, enhance the market's sophistication and widen funding options for middle and lower-middle income groups if applied and enforced. At the present time, if a Saudi hopes to buy a home he would either dip into family savings or get a bank loan-option reserved for those who could afford substantial down payments, repayment schemes of 15 years or less, and high interest charges ... mortgage recipients thus fell into a relatively low-risk profile for banks as the latest financial reports reveal. So, the mortgage law could change the entire equation, but it would do so at the expense of some social protections, which safeguard tenants against eviction from their homes by allowing banks to repossess properties and evict owners who default on loan repayment. Such a practice is often regarded as inconsistent with the values of Islamic law. Under Islamic mortgages, banks buy the property on behalf of the borrower and resell it to them at a profit, allowing the buyer to pay them back in installments. Another "lease to purchase" method involves the mortgagee renting the property from the bank, while paying down the principal and gaining equity.
A: Saudi Arabia looks at every obstacle as a challenge and every challenge as an opportunity. So let me say "Sure we can." The commitment made by the government to prioritize housing development as a central focus of its economic stimulus measures is indeed likely to drive the Saudi housing market forward at a rate matched by few other countries. In an uncertain international economic environment, this offers not valuable reassurance of addressing an important structural economic concern but will also support economic development by stimulating construction and financial services. The recent royal decrees allocate SR250 billion for the purpose of building 500,000 units in the coming years. The process of awarding government contracts to developers and designers has already begun.
A: Ewaan Global Residential Co. has signed two contracts with New Job Co. and Al-Arjab Contractors to build the infrastructure and an electromechanical installation as part of the first phase of the Alfareeda Residential Project. The two deals were signed during the Jeddah International Urban Development and Real Estate Investment Exhibition held recently. According to the contracts, New Job Co. is responsible for 199 villas, while Al-Arjab Contractors takes care of 170 villas. I am very sure that the two companies, known for their efficiency and commitment, will achieve Ewaan's overall ambitions for the project to achieve an integrated project comprising 2,088 residential units (villas) covering more than 1 million square meters and aims to create a sophisticated residential environment and integrated services.
A: The major feature of this project is its location. Being located in the rapidly growing section of Northern Jeddah city, the project will offer all the basic needs with an elegant style that will provide a social coherence between all society members and Saudi values and traditions. The company, and since its start, has always had a vision to serve middle class members by providing residential services at competitive rates. All of this falls under the fact that the middle class members form a large percentage of the Saudi society and are always seeking a specialized company with services and products that meet their needs and the modern life style they follow in providing added-value services. This project will provide all the basic needs of daily life in an elevated style, where comfort and quiet prevail. Moreover, the fantastic outer architecture design is a valuable addition to the magnificent view. As for the interior of the unit, the design takes into consideration many of the specific needs of the Saudi environment. Above all, the project will create a social atmosphere that matches the great social traditions prevalent in the Saudi society. Each project includes the following: Mosques, educational facilities, medical facilities, tree-planting and avenues, residential units, shopping center and sports club.
A: Alfareeda Residential Project is our vital step toward showing off our unique experience and our professional good reputation in such an important project in Jeddah, which contains 2,500 units with a budget of SR1.2 billion. This project aims at creating an advanced residential environment with integrated services, which meet the requirements and the limited budgets of the middle-income class.
A: Ewaan Company is the outcome of a partnership of a group of well-known corporations like Islamic Corporation for the Development of Private Sector (ICD) which is affiliated to the Islamic Development Bank (IDB), Real Estate Development Co., Public Pension Agency, International Investment Bank, based in Bahrain in addition to a group of private companies and businessmen. Ewaan has tried since foundation to affiliate with international professional companies in real estate industry including its alliance with the Canadian Trow International Co. for project management aiming to provide real estate projects with major and entertainment services to levels that need help in Saudi Arabia which was specified by the company's market statistics to these with a monthly income between SR8,000 and SR15,000. To solve the funding dilemma, we went early to cooperate with the ICD, where Alfareeda Residential Project was the fruit of this cooperation under Ewaan/Alfareeda name to provide the necessary funding for the project. The company now manages Alfareeda project and provides all the means for its implementation and development plans.
A: I would like to add two final points: First, since most developers are seeking luxurious projects to serve high class income people, this has made housing a serious problem in the Gulf countries to mid- and low-income people. We at Ewaan have a clear vision, which is to provide projects and products to mid-income people as a social message while also achieving commercial goals of the company. Second, all our achievements were mainly accomplished by Saudi citizens. The real estate sector requires skilled people capable of achieving ambitious goals, and this motivates Ewaan to seek Saudis, who are undoubtedly the future of the Kingdom. This initiative comes in response to the generous Royal Decrees issued by Custodian of the Two Holy Mosques King Abdullah, which is valuable in creating job opportunities for Saudis. By Q2, 2011, the Saudization level in Ewaan was 45 percent and the company is highly committed to Saudization based on its belief that Saudi nationals represent the future of the company and above all the future of our beloved Kingdom.
