New mortgage law ‘to spur Saudi real estate’
Dubai, April 25, 2011
The proposed revision of mortgage lending in Saudi Arabia is expected to spark renewed interest in the residential sector, according to an expert.
“If the proposed revisions to mortgage lending take hold, the impact on the residential market could be significant – encouraging home ownership and boosting residential development in Saudi Arabia,” said Nick MacLean, managing director of CB Richard Ellis (CBRE) Middle East, a leading global real estate adviser.
“Considerable growth in the country’s population over the past few decades has caused mounting pressure on the supply of housing stock in the market, so any change that will increase the amount of capital flowing into the residential sector should support an increase in development activity.”
“Strict adherence to Sharia law has historically limited home ownership to equity buyers. The proposed reforms would introduce Sharia-compliant mortgages that would open up the housing market to a much wider proportion of the population and increase bank capital flowing into the residential sector,” MacLean continued.
“Although this is by no means a new initiative, the recent political upheaval in neighbouring Bahrain and elsewhere in Mena, has provided additional stimulus for addressing change in the Kingdom. The review of mortgage lending comes amid other initiatives, including the establishment of a social fund worth $38 billion.”
“While the mortgage laws still require final approval by King Abdullah, the approval of the changes by the Shura council is a significant step towards the goal of improving liquidity in the mortgage market,” MacLean noted.
“If Saudi nationals take advantage of the proposed changes to the banking system it will provide residential developers from both the Kingdom and other GCC countries with a renewed case for entering the market,” he opined.
“However, even if the bill is given final approval in the near future, banks will still need to put in place procedural changes, such as due diligence, before the legislation would impact the market,” Maclean concluded. – TradeArabia News Service
More Construction & Real Estate Stories
- Bahrain awards $5.8m project tenders
- Spinneys to set up distribution centre at Kizad
- Dubai unveils $300m hitech 'green' city project
- Deyaar plans $245m Dubai complex
- IFA unveils $272m Dubai mixed-use project
- CBRE tops Fortune’s most admired firms list
- Kuwait's real estate sales hit $1.1bn in Jan
- Dubai RTA awards $27m roads contract
- Work to start on Bahrain beach project
- Damac launches luxury apartments at Expo site
- Kuwaitis top GCC property buyers in Oman
- Rubber World to showcase at Big 5 Saudi
- Tool to help create effective property listings
- 'Smart' move by Dubai Design District
- Drake unit wins $13m contract in India
- Solar-powered cleaning boats launched in Sharjah
- $27m Expo Hotel Sharjah deal signed
- Arabtec unit wins $282m Emaar contract
- Abu Dhabi to host pool & spa expo
- ADCM unit secures $213m bridging loan
- Cluttons Dubai launches new luxury apartments
- Dubai developer Damac profits triple to $641m
- Dubai to start work on $544m water canal
- Dubai property market can absorb 25,000 units
- Jones Lang LaSalle renamed 'JLL'
- Aldar raises synergy estimate from Sorouh merger
- UAE industrial property sector keeps up growth
- Dubai residential property prices up 26pc
- Majid Al Futtaim to build new mall in Dubai IMPZ
- 300 firms to take part in Dubai property forum