11,000 homes. By 2029, the JDURC plans to provide a further 670,000 homes.
Affordable finance Te CB Richard Ellis report “Market View Saudi Arabia 2010 Half 2” highlighted how the rapid population growth continues to cause a growing imbalance in the housing market demand-supply gap. Te report stated the gap continues to widen between the growing population of Saudi Arabia, the relative absence of mortgage-related purchases and supply of affordable housing. According to a recent report from NCB Capital, there will be a $320m financing demand expected over the next decade. Mr Williams said: “As the actual accessible demand for housing for sale
remains limited due to the lack of home finance, rental rates have been more robust than sale prices in 2010. With more than half of the Saudi population still relying on rental accommodation, and with over 60% of the population below the age of 30, the pressure for affordable finance is expected to remain intense, and demand for rental property high.” Te CBRE report draws comparisons with other more advanced countries, stating the Gulf mortgage markets are generally underdeveloped by global standards, with Saudi Arabia taking the lead. It is thought less than one percent of home purchases are financed by mortgages there compared
to 7% in the UAE. Tese figures are well below those of the US which is a more advanced residential market, where 66% of sales are financed by mortgages. In the report, Mr Williams said: “According to the Saudi Arabia Monitory
Authority (SAMA) the mortgage market reached SAR14.9bn (excluding the Real Estate Development Fund (REDF) by 2008 less than 1% of GDP. Tis compares to around 16% in Bahrain, 11% in Jordan, and around 7% in the UAE. Including REDF increases, the market size of 5.2% of GDP still lags well behind most GCC mortgage markets. Based on preliminary results of the 2010 Census, the housing demand/ supply gap is forecast to narrow marginally in coming years, with an annual shortfall of 34% estimated between housing demand and housing supply by 2015 compared to 46% in 2010.” According to NCB Capital, the home finance gap has led to an opportunity
for private lenders. In the wake of annual shortfalls in excess of 150,000 housing units and an overall deficit of two million housing units, it is anticipated that private lenders will increasingly seek opportunities to exploit the existing market gap in the finance sector. Prices stable? According to Jones Lang LaSalle’s MENA Jeddah City Profile June 2010, land traded well over the first half of 2010, suggesting that confidence was recovering. Supply was however restrained by tight credit and there g
JUNE 2011 I CITYSCAPE I 7
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