Dar Alarkan says Sukuk holders don’t earn more than shareholders; developers financing still weak

Yousef Al-Shelash, Chairman of Dar Alarkan Real Estate Development Co.

Dar Alarkan Real Estate Development Co. does not plan to issue Sukuk currently, Chairman Yousef Al-Shelash told Asharq TV.
 

He noted that it is not right to believe that Sukuk holders earn more than shareholders, as company profitability and retained earnings are much higher than Sukuk returns.
 

Individual real estate financing reached a strong level, thanks to the joint efforts of the Ministry of Municipal, Rural Affairs and Housing, Saudi Central Bank (SAMA) and others, Al-Shelash said.
 

He added that developers financing is still very weak, as banks have concerns towards developers. Thus, several real estate companies resort to Sukuk issuance.
 

Banks provide financing to individuals, which boosts demand against supply and contributes to raising prices.
 

The Chairman attributed the high real estate prices in the Kingdom to weak supply, due to slow licensing procedures and suspension of developing some land plots on relevant problems.
 

He expects that the supply will improve in the coming period, through activating the currently-suspended offers, or launch of new projects, which would mitigate the price hike.
 

The strong rise in real estate prices is unhealthy and would not benefit the market in the long run, Al-Shelash concluded.