{"id":100558,"date":"2026-02-18T13:59:03","date_gmt":"2026-02-18T10:59:03","guid":{"rendered":"https:\/\/amlak.net.sa\/?p=100558"},"modified":"2026-02-18T13:59:04","modified_gmt":"2026-02-18T10:59:04","slug":"%d8%ae%d8%b7%d8%a9-%d8%aa%d8%b5%d9%81%d9%8a%d8%a9-%d8%a7%d9%84%d8%b9%d9%82%d8%a7%d8%b1%d8%a7%d8%aa-%d8%a8%d8%a7%d9%84%d8%a8%d9%86%d9%88%d9%83-%d9%87%d9%84-%d8%aa%d8%b9%d9%8a%d8%af-%d8%a7%d9%84%d8%aa","status":"publish","type":"post","link":"https:\/\/amlak.net.sa\/en\/100558\/","title":{"rendered":"Bank Real Estate Liquidation Plan. Will it rebalance the real estate market?"},"content":{"rendered":"

The Saudi real estate market is undergoing a significant regulatory transformation following the implementation of Saudi Central Bank<\/a><\/strong> Banks and Financial Institutions: Submission of an Annual Plan To liquidate real estate<\/a><\/strong> which it holds as a result of settling the debts of delinquent customers, with the aim of reducing the accumulation of real estate assets on its balance sheets and promoting their trading in the market. <\/p>\n\n\n\n

This decision comes at a critical time for the market and is part of a comprehensive strategy to restore balance to the real estate market and improve capital efficiency in the banking sector, amid expectations that it will have positive effects in the medium and long term.<\/p>\n\n\n\n

Requiring Banks to Submit an Annual Plan for the Liquidation of Real Estate<\/strong>
The Central Bank requires all banks to submit a standardized and organized annual liquidation plan that includes all real estate properties that have been transferred to their ownership as a result of customer defaults, within 30 days of the end of each calendar year. The decision covers properties for which the statutory retention period is nearing expiration, as well as those requiring an extension, with a clear exception for cases where banks own properties necessary for their operations or for housing their employees.<\/p>\n\n\n\n

This regulation is consistent with the banking supervision system, which stipulates that real estate owned by a bank in satisfaction of a debt must be liquidated within three years, while allowing for an extension of this period under exceptional circumstances with the approval of the regulatory authorities. The primary objective is to prevent the unjustified retention of real estate on balance sheets, thereby limiting market distortions and providing greater liquidity.<\/p>\n\n\n\n

Increasing Supply and Achieving Balance<\/strong>
From a market perspective, putting more properties\u2014which banks have acquired through settlements\u2014on the market means injecting additional supply into the real estate market, which may put downward pressure on prices in the short term in certain segments. However, this helps improve market balance in the medium term by reducing unintended monopolies and increasing supply transparency, as supply becomes gradual and predictable.<\/p>\n\n\n\n

Furthermore, having an annual liquidation plan elevates banks\u2019 real estate portfolios from mere operational matters to ones managed according to a clear strategic plan, thereby enhancing the level of governance and accountability within financial institutions.<\/p>\n\n\n\n

Legal and Procedural Aspects<\/strong>
The most significant obstacles in the real estate liquidation process are the legal and procedural complexities associated with the transfer of ownership, such as ownership disputes, difficulties in vacating the property, or operational and administrative issues. Therefore, each distressed property requires legal and technical effort to complete its documentation and prepare it for sale, which prolongs the liquidation cycle. In addition, banks previously had the ability to cite high reserve prices that mirrored the value of the debt and interest, justifying keeping the properties on their balance sheets for extended periods. However, the current regulatory emphasis on adopting a comprehensive annual plan eliminates the possibility of repeated individual extensions, thereby incentivizing banks to accelerate the disposal of these assets.<\/p>\n\n\n\n

A Radical Transformation in the Management of Intangible Assets<\/strong>
This step represents a radical shift in banks\u2019 policy on managing illiquid assets, as it helps improve capital efficiency and reduce systemic risks; frozen real estate does not generate returns like active loans and increases financial burdens.<\/p>\n\n\n\n

The decision is expected to boost the confidence of local and foreign investors, particularly large investment funds, which seek transparency and clear forecasts regarding asset and liquidity flows within the banking sector. The decision also places the responsibility on banks to reassess the quality of mortgage credit and to focus on conducting more thorough due diligence on projects, developers, and customers, which will have a positive impact on the real estate market by reducing defaults and improving financial stability in the medium and long term.<\/p>\n\n\n\n

Providing Investment Opportunities <\/strong>
The influx of distressed properties into the market creates investment opportunities at more realistic prices, especially for properties that require redevelopment or are unfinished. This influx will not cause a price collapse, but rather a correction and a process of selection that reflects the properties\u2019 quality, location, and operational viability, thereby fostering a more mature and sustainable market.<\/p>\n\n\n\n

Conversely, the decision sends a strong message to the real estate sector regarding the importance of raising financing and credit standards to avoid the accumulation of non-performing assets, thereby strengthening the market\u2019s ability to weather fluctuations and achieve healthy, sustainable growth. The Saudi Central Bank\u2019s requirement that banks and financial institutions develop an annual plan for liquidating non-performing real estate is a strategic regulatory step that will restore banks\u2019 financial health and revitalize the real estate market. This decision enhances market transparency, promotes a healthy balance between supply and demand, limits price distortions, improves the quality of real estate financing, and reduces the risk of default.<\/p>\n\n\n\n

In conclusion, this measure represents a significant shift toward a more flexible and efficient economy, as frozen real estate is transformed from idle assets into productive investment opportunities, while maintaining the stability of the Kingdom\u2019s financial and real estate sectors.<\/p>","protected":false},"excerpt":{"rendered":"

Reading time: <\/span> 3<\/span> Minutes<\/span><\/span>The Saudi real estate market is witnessing an important regulatory shift after the Central Bank of Saudi Arabia required banks to submit an annual plan to liquidate the properties they own as a result of settling the debts of defaulted customers, with the aim of reducing the accumulation of real estate assets within their balance sheets and enhancing their trading in the market. The decision comes at a vital time for the market and within the framework of a comprehensive strategy to rebalance the real estate market and improve ... 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