Saudi Arabia approves mortgage law
Source: BI-ME with Reuters , Author: Posted by BI-ME staff
Posted: Mon July 2, 2012 6:43 pm
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SAUDI ARABIA. Saudi Arabia has approved a draft law allowing mortgages to be sold in the kingdom, the state news agency said on Monday.

"It should help address one of the critical social issues in the kingdom - housing," James Reeve, senior economist at Samba Financial Group, told Reuters.

Housing has long been an issue in a fast-growing country of 27 million people, most of whom are under the age of 30, with a lack of low- and medium-cost housing compounded by limited finance options to help bridge the gap to home ownership.

The law is also expected to be a boon for banks, by creating a new revenue stream. Annual demand has been put at 150,000 and 200,000 units per year, according to real estate service company Jones Lang LaSalle.

"Banks are well capitalised, liquid and geared up to proved the lending that is required," Reeve said.

The long-awaited law has been held up due to considerations around providing mortgage finance in an Islamic sharia-compliant manner, and how to deal with sensitive issues such as letting banks take away a borrower's home if they default.

While not providing details , the statement reported by the Saudi Press Agency said the draft includes measures "to ensure the fairness of the transaction and the safety of the financial system".

Home loans do exist in Saudi Arabia, with payments deducted from salaries when these enter bank accounts.

However, the new law allows for the first time the creation of products secured against the property, meaning the borrower can benefit from ownership of the asset, the statement said.

While the announcement came after the market close, shares in Saudi real estate companies jumped on Monday. The real estate index leapt 5.5%, versus the main measure's 0.6% advance.

Regulation of the mortgage sector will be undertaken by the country's central bank, the Saudi Arabian Monetary Agency, the statement added.

 

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: August 4, 2015
UAE. July data suggested that the UAE's non-oil private sector regained some of the growth momentum that was lost at the end of the second quarter; Output and new orders both rose at sharper rates, contributing to a robust overall improvement in business conditions.
date:Posted: August 4, 2015
EGYPT. Latest data painted a bleak picture; Business conditions worsened amid declines in output, new orders and employment, although the respective rates of contraction were only slight.
date:Posted: August 4, 2015
SAUDI ARABIA. Stronger growth of the sector as a whole was mainly driven by sharper expansions in both output and new orders, while purchasing activity also rose more quickly; However, data for employment bucked the general trend, as the rate of hiring eased to a 14-month low.
SAUDI ARABIA. Office and residential sectors are positioned for further rental growth during remainder of 2015; Hotel and retail sectors appear closer to the peak; Residential market remains mixed, with apartments seeing continued rental growth while villa rents have declined.
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