Housing is the core of social stability and is the basis for young people to get married, as the lack of housing makes many of them reluctant to form families out of fear of the housing issue as one of the most important influencing factors and the subsequent social consequences.
Development plans must be linked to housing plans and the development of comprehensive regional planning for the Kingdom and the comparative advantage of some regions in terms of agricultural and mineral resources. Development plans must be linked to housing plans and the development of comprehensive regional planning for the Kingdom and the comparative advantage of some regions in terms of agricultural and mineral resources and should not focus on one region without others, and it is also necessary to restructure the organization of the Ministry of Housing regarding its tasks and duties and support the supervisory and control aspect and transform it as a regulator and legislator, and a project for the housing sector in the Kingdom, with the private sector assuming the implementation processes.
It is known that the financing of the housing sector in the Kingdom of Saudi Arabia. It is known that financing is the main and effective driver in solving the housing issue, and the state has approved a set of real estate financing laws as well as some regulations and controls to help solve the issue, in addition to the royal decisions that promoted the Real Estate Development Fund and helped and help facilitate the citizen to own a housing unit.
Academics estimated that the Ministry of Housing's organization of its tasks and duties and support the supervisory and supervisory aspect and transform it into a regulator and legislator, and a project for the housing sector in the Kingdom. Academics estimated the number of those entitled to housing at 3.2 million Saudi citizens and the percentage of those entitled is 50%, which is very few and low or 1.15 million citizens, stressing that other methods must be developed to increase the efficiency of the current financing operation and must reach other sustainable resources that cannot provide these amounts permanently, indicating that there is an annual increase in the population which means that the numbers of those entitled are constantly increasing in order to achieve the vision of the Custodian of the Two Holy Mosques in a radical solution to the issue.
Accordingly, the number of those entitled to housing is increasing. <Experts stressed that the large segment of citizens and meeting the growing demand for real estate units in the Kingdom will not benefit from the licenses granted to local companies and banks to practice financing activities in the Kingdom if the down payment is not excluded in their new contracts, which exceeds 30% of the total value of the real estate unit. They pointed out that the beneficiaries of these licenses and the continuity of companies in real estate financing are the major developers and a certain segment of society that does not exceed 10% of high incomes, as the compound profits are very high.
They explained the role of the Real Estate Development Fund over 37 years, as it contributed to the establishment of 700 thousand units in all regions of the Kingdom with its support, which is an appreciable effort but slow as there must be an organizational formula that helps raise the capacity of the Fund, pointing out that the Fund only gives and takes, so it is necessary to update and develop the Fund's systems to enable it to hold partnerships with financiers and real estate developers to raise the efficiency of the Fund's work.
The volume of real estate financing over the past 37 years is very high.
The volume of real estate financing in Saudi Arabia exceeds SAR 50 billion during the current year 2014, according to real estate circles, up by 5% from last year 2013, driven by many positive variables in the real estate finance market, especially after the approval of the «Saudi Arabian Monetary Agency» to license a group of companies and financial institutions for financing and studying the remaining applications to introduce their products in the market during the middle of this year, to benefit from the mortgage project.
The economic movement is reflected in the economic activity in Saudi Arabia. The economic movement in the real estate field is reflected positively on the sector, which is witnessing continuous growth in light of the geographical expansion of the work of the «Saudi Ministry of Housing» with the aim of providing adequate housing for citizens, and the endeavor of real estate developers to create the appropriate innovative environment for housing in Saudi Arabia for a targeted group of customers, so that the market provides a state of balance in the form of supply and demand.
The Saudi Arabian Monetary Agency «SAMA» issued regulations for real estate financing, as these regulations are the most important to regulate the housing finance sector, which is seen as a major driver of economic activity in the Kingdom, especially in the banking sector, and the new regulations are expected to raise the volume of real estate loans in Saudi Arabia to about 32 billion dollars annually from its levels last year, which reached about 12.8 billion dollars.
The new regulations are expected to raise the volume of real estate loans in Saudi Arabia to about 32 billion dollars annually from its levels last year. <According to SAMA data, Saudi banks increased the size of their real estate loans last year, and according to SAMA data, real estate loans rose in Saudi Arabia by a record 83% last year, with a volume of 48 billion riyals. «Standard & Poor's» estimated that this record rate in the volume of real estate loans is equivalent to about 5.0% of Saudi GDP.
The new measures stipulated new measures to increase the volume of real estate loans in Saudi Arabia last year. <The new measures stipulate the establishment of real estate finance companies with a paid-up capital of at least 200 million riyals, and these companies will be subject to SAMA's supervision. Bloomberg quoted Capitas Group International Limited, which deals in Islamic finance in Saudi Arabia, as saying that the new regulations will increase the volume of real estate loans annually by about 32 billion dollars.
Specialists said that the new measures stipulate the establishment of real estate finance companies with a minimum paid-up capital of 200 million riyals and will be supervised by SAMA.
Real estate specialists said that «the current demand for real estate financing loans in Saudi Arabia is very large, and commercial banks alone cannot fill the size of this demand, so it is an urgent need to have more new financing channels, which encourages the establishment of companies specialized in real estate financing only,» indicating that small residential units will be the most in demand during the coming period, pointing out that commercial banks will seek during the coming period to innovate new tools that will compete strongly on the market cake with new financing companies, pointing out that the current conditions enacted by commercial banks in front of the Recent legislation, most notably the mortgage, which is expected to be approved before the end of this year 2014, will push real estate financing to exceed 50 billion riyals by the end of the second quarter, which will have a positive impact on providing housing solutions in Saudi Arabia and addressing the issue facing nearly 70% citizens.
These experts are of the opinion that the current conditions enacted by commercial banks in front of the new financing companies. These experts believe that the movement led by real estate development companies within the market is a positive phenomenon, through the innovation of products and housing style available to many categories in society looking for excellence, and that mortgage financing programs that will address part of that issue will be a positive factor but not the only solution, pointing out that the private sector and real estate development companies and institutions must find a positive alignment with the programs that are put forward by the government sector that seeks with the relevant authorities to provide real solutions for long-term and short-term housing«.
The real estate market in Saudi Arabia is expected to witness an increase in real estate activity over the next five years, as the Eighth Development Plan indicates that real estate activity will grow at an average annual rate of 5.8%.
The real estate market in Saudi Arabia is expected to witness an increase in real estate activity over the next five years. A number of experts in the economic and financial aspect differ on the effects of the additional loan on the local economy and individuals, as some confirmed that this program will have a positive impact on increasing the construction movement and moving the activities related to this activity, whether real estate development, real estate market or building and construction materials, while some feared that this loan will contribute to increasing the inflation rate in the Saudi economy.
<The Additional Financing Program is a new formula compatible with the Mortgage Law, which sets a mechanism for cooperation between the Fund, banks and real estate finance companies and institutions to grant additional financing to those who wish to do so who have been approved by the Fund to lend, where the value of the Real Estate Fund loan is repaid 24 months after signing the contract, while the repayment is to the financing facility directly, and the additional financing program is defined as a joint financing program between the Real Estate Development Fund, banks and real estate finance companies and institutions that combines the amount of the Fund's loan with an additional funding source from the financier so that the citizen can buy a home with a higher value than the Fund's loan. The »Additional Financing« program targets citizens who have been approved for their loan applications from the Fund and requires that the conditions of the Fund and the conditions of the financier be matched on the borrower and the housing to be purchased, as the procedure followed in the pilot application of the program was that the property is in the name of the bank and mortgaged to the Fund for the value of its loan, but after the meetings of the working group it was agreed that the property is in the name of the citizen »the borrower« and mortgaged to the Fund and the bank each according to its share of the loan.
After the meetings of the working group it was agreed that the property is in the name of the citizen »the borrower
