Saudi Gazette report

THE Public Investment Fund (PIF) has announced the establishment of the Saudi Real Estate Refinance Company (SRC) in line with Vision 2030 objectives to improve the performance of the real estate market. It also aims at increasing contribution to gross domestic product (GDP) and raising the rate of homeownership among Saudis to 52 percent by the end of 2020.

Demand for real estate financing in the Kingdom is expected to increase from SR 280 billion in 2017 to SAR 500 billion in 2026, according to a PIF statement, carried by Saudi Press Agency. The Saudi Arabian Monetary Authority (SAMA) has granted license to the company to undertake real estate refinancing activities

The new company, which is launched in partnership with the Ministry of Housing, is designed to stimulate the housing sector development in the Kingdom by injecting liquidity into the real estate market. SRC is anticipated to refinance up to SR75 billion for the Kingdom’s housing sector over the next five years, reaching SR170 billion by 2026.

The company, headed by Minister of Housing Majed Al-Hoqail, 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 endeavors 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.

PIF sources said that SRC would 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.

The company’s activities will also include issuing bonds as securities, supported through real estate mortgage contracts over the short and long term, to real estate financing companies. SRC is considered as a leading new initiative for the Kingdom’s housing sector, launched in line with the highest international standards.