Saudi-based companies, Al-Khabeer Merchant Finance Corporation and Al Mutajra installments company,  have joined hands to establish ‘Dari for Home Loans,’ a new Sharia-compliant real estate finance firm built with a SR1 billion ($266.6 million) capital.

The company will fund the construction and purchase of houses and residential properties in accordance with Islamic Sharia principles.

Dari Home Loans will become one of the first real estate financing companies in the Kingdom to specifically cater to the middle income sector, providing the highest levels of excellence, quality and services.

The company will assist in assessments of potential house purchases, the construction of villas and residential buildings, and will also offer favourable payment periods in keeping with Sharia provisions, said a top official.

The property funding specialist will initially operate in Riyadh, eventually expanding to cover the Western and Eastern regions of the Kingdom. It will not include property developers among its pool of clients.

Mohammad Sheikh, chief operating officer of Dari Home Loans, also manages two personal financing companies in the Kingdom and has extensive experience in the field.

'We are confident that the support of well-known members, who are actively involved in the finance and installments markets, will enable us to establish the proper environment and provide excellent services which will have positive effects on the Saudi’s real estate sector.'

'We expect Dari Home Loans to encourage individuals and institutions to invest in this rapidly-growing sector and take advantage of the extensive and prestigious experience of the company’s founders,' Sheikh noted.

He pointed out that Saudi’s real estate finance segment is still in the early stages of development and has been collaborating with the public and private sectors in the development of rules and regulations governing this industry.

Such initiatives aim to ensure the proper functioning of market mechanisms in a manner that preserves the rights of customers and protects real estate financing companies so that they can continue to fund affordable housing.

'These in addition to our efforts are expected to increase demand for funding, which will be based on fixed price rates, especially as around 70 per cent of Saudis under the age of 30 do not have a home,” he added.

Dari Home Loans is currently appointing personnel and officials for managing its human resources and is negotiating with a global partner for the transfer of management experience to this sector in the Kingdom.

Al-Khabeer is adopting its turnkey and integrated banking solutions to develop Dari, as Al-Khabeer directs the finance and advisory for the company.-TradeArabia News Service