Only 38 percent of Saudis own houses

JEDDAH: There are strong indications that commercial banks will increase their real estate financing this year. Last year, banks offered Saudi citizens housing loans amounting to more than SR6 billion, business daily Al-eqtisadiah reported Wednesday, quoting banking sources.

Official statistics show that only about 38 percent of Saudis own houses, including the communal ones. Banking sources described this rate as low compared to the other developed countries, where 65 to 75 percent of the population own houses.

"Most of the banks, if not all, are inclined to expand their real estate financing in the light of the increasing demand for housing units in the Kingdom," said Saad Al-sheikh, first vice president and senior economist at the National Commercial Bank. He said Saudi banks have sufficient liquidity to extend more housing loans.

Building private houses might not lead to a drop in rents, cautioned Al-sheikh. "Housing rents will drop only when government real estate projects are completed," he said.

He was

confident

that

the Ministry of Housing’s construction of 500,000 housing units at the cost of SR250 billion would increase the supply and automatically bring down rents. "It will not be this year or the next. We may probably see results after 2014," he added.

Khaled Al-othman, chairman of the corporate banking services in Al-jazira Bank, said the demand for houses would annually increase as very few Saudis own private homes. He said the young men would usually seek to have their private accommodation after marriage.

"It is natural for banks to cater to consumers’ needs and increase its real estate financing," he said.

Al-othman said the demand for real estate units was promising, judged by the figures of previous years. He said the share of his bank in real estate financing last year was about 25 percent.