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Saudi fund launches real estate refinance company

19-10-2017

Saudi Arabia's Public Investment Fund (PIF) has launched a new real estate refinance company, in line with its Vision 2030 objectives of improving the performance of the real estate market, increasing its contribution to the GDP, and raising the rate of homeownership among its citizens to 52 per cent by the end of 2020.

The demand for real estate financing in the kingdom is expected to increase from the current SR280 billion ($74.6 billion) to SR500 billion ($133.2 billion) in 2026, said a statement from PIF.

Launched in partnership with the Ministry of Housing, and under the chairmanship of Majed Al Hogail, the Minister of Housing, the new entity Saudi Real Estate Refinance Company (SRC) is designed to stimulate housing sector development in the kingdom by injecting liquidity into the real estate market.

A leading new initiative for the kingdom's housing sector, SRC was launched in line with the highest international standards.

The new Saudi firm is likely to refinance up to SR75 billion ($20 billion) for the kingdom's housing sector over the next five years, reaching SR170 billion ($45.3 billion) by 2026, it stated.

According to PIF, the new company will act as an intermediary access point for investors, aligning the liquidity, capital, and risk management requirements of real estate mortgage companies, with the risk acceptability and return on equity to meet investor targets.

It endeavours to create stability and growth in the kingdom's housing sector by injecting liquidity into the secondary mortgage market, improving standards, and facilitating access to local and international financing sources.

SRC will adopt a strategy of acquiring mortgage funds to increase financial capabilities and broaden the activities of real estate financing companies. It will also work on linking the investment capital of foreign and local investors with the range of opportunities available in the Kingdom's growing housing market, said the statement.

In addition, the company's activities will include issuing bonds as securities, supported through real estate mortgage contracts over the short and long term, to real estate financing companies, it added.-TradeArabia News Service




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