Capital market provided SAR 120B real estate financing in 3 years: El-Kuwaiz

The volume of real estate financing provided for companies and institutions from the products of the capital market amounted to SAR 120 billion, equivalent to 40% of the total financing for this sector during the last three years, Chairman of Capital Market Authority (CMA) Mohammed Al-Kuwaiz said.

Speaking at the Real Estate Future Forum, Al-Kuwaiz noted that this type of financing continues to rise, both in size and in percentage, adding that the total financing for developers from traditional sources such as banks and real estate finance companies amounted to SAR 160 billion.

The financing did not come only through offering in the equity market or increasing capital—this constitutes between 5% and 10% of the total financing. The majority of the financing came from real estate funds, as at present they have become one of the most important tributaries to finance the real estate sector, he added.

He further explained that REITs are considered one of the various real estate products and funds available, as REITs, real estate income funds, real estate development funds, closed-end traded funds and real estate funds are all available by the fund distribution platforms.

There is a great opportunity for the real estate sector, not only in expanding the sources of financing but also diversification in the types of financing—whether by offering in the financial market or benefiting from the debt markets, the chairman noted.

Saudi companies borrowed SAR 80 billion through the debt market during the past three years, with the share of the real estate sector at SAR 100 million, Al-Kuwaiz added.

Meanwhile, he pointed out that the size of the real estate sector and the sectors associated with building and construction constitute about 11% of the Saudi economy, expecting that the major projects and future aspirations in the housing and tourism programs indicate that the future demand in the sector will rise.