Saudi Arabia’s Public Investment Fund (PIF) announced they have established the Saudi Real Estate Refinance Company (SRC), which aims to stimulate the housing sector development by instilling liquidity in the property market.
Aligned with the Vision 2030 objective, to increase the property market, the company aims to increase Saudi home ownership to 52% by 2020.
The PIF said in a statement that the demand for real estate financing was expected to increase from SAR280 billion in 2017 to SAR500 billion by 2026.
The SRC was launched in partnership with the Ministry of Housing, and is expected to refinance up to SAR75 billion for the kingdom’s housing sector over the next five years, reaching SAR 170 billion by 2026.
The company will act as an intermediary for investors, and will regulate the liquidity, capital and risk management requirements of real estate mortgage companies, with the risk acceptability and return on equity to meet investor targets, PIF said.
It aims to create stability and growth in Saudi’s housing sector by increasing liquidity into the secondary mortgage market, bettering standards, and facilitating access to local and international financing sources.
The SRC will increase their ability to acquire mortgage funds to increase their financial capabilities to widen the range of real estate financing companies. It will also work to link foreign and local investors with a range of opportunities in the Kingdom.
The company will also be responsible for issuing bonds as security, supported through real estate mortgage contracts.