Subsidized mortgages in Saudi Arabia exceed 100,000 contracts, says housing ministry

Subsidized mortgage contracts reached over 55,000 in the first half of 2019, bringing the program’s total contracts to over 100,000 for the beneficiaries of both the ministry and the Real Estate Development Fund (REDF), according to the Ministry of Housing.

During Sakani Expo, the quarterly housing fair organized by the ministry in Riyadh yesterday, Sakani Comprehensive Center was launched, aiming to provide a one-stop-shop for all Sakani services and under-construction projects in the capital.

The step allows housing beneficiaries to reserve units and sign their contracts at the center, which also provides real estate consultancy and hosts lenders’ representatives.

“Contracts signed with Sakani beneficiaries account for 86 percent of the total mortgages signed by the end of H1 2019,” Khalid Al-Amoudi, general supervisor of REDF, said during the event.

“Financing procedures eased due to the support of more than 30 electronic services, in addition to the real estate consultant service and Sakani expos held across the Kingdom,” he said.

“We can now say that the housing finance scheme is complete, as we have more than 16 financing entities serving Sakani beneficiaries,” he added.

Commenting on housing land offered as part of the Sakani program, Hassan Alhazmi, deputy minister of housing for lands and technical affairs, said that the ministry is developing around 250 million square meters that will provide 176,000 land plots in 159 schemes across the Kingdom to be offered to Sakani beneficiaries free-of-charge.

“Out of these, 37 schemes that include 42,000 land plots totaling 58,000 square meters were awarded in H1 2019,” he said, adding that “they will be finished soon.”

More than 80,000 families across the Kingdom benefited from Sakani’s options year-to-date, including 38,000 that already settled into their homes, Marwan Zawawi supervisor of the ministry’s housing products said.

“There are currently 53 housing projects under-construction, offering around 105,000 units -- in partnership with the private sector – at prices ranging between SAR 250,000 and SAR 750,000,” Zawawi said.

Bader Al-Otaibi, director of supervision on finance companies at the Saudi Arabian Monetary Agency (SAMA), said that the retail mortgage contracts saw significant growth in the last five months, compared to previous years, thanks to the efforts of both the public and private sectors to provide a variety of financing solutions.

“Subsidized loans offered by government agencies accounted for about 7 percent of the total loans in 2017,” Al-Otaibi added.

“A year later, retail housing loans offered by banks and financing firms reached 45 percent, while in the first months of this year, subsidized loans given through Sakani program leapt to account for 84 percent of the total retail mortgage loans,” he said.

Retail real estate loans grew from 2,000 loans per month to around 14,000 loans per month in 2019.

“The size of new retail mortgage loans granted by banks increased to SAR 27.02 billion by the end of 2018, a 43 percent year-on-year (YoY) increase, while in H1 2019 the figure rose to SAR 30 billion,” Al-Otaibi concluded.