Kingdom will need to invest the money between 2011 and 2020 to bridge the supply-demand gap over the next decade
Saudi Arabia needs to investment approximately $346bn to construct 2.4 million new houses between 2011 and 2020, a study by the National Commercial Bank has found.
In its Saudi Housing Review for the month of September 2012, the bank found that both government and private entities would need to spend significant amounts to bridge the supply and demand gap.
However, the report added that the growing demand in the housing market would create many opportunities for both commercial banks and real estate developers to take on more active roles in the market.
In the medium to long term, NCB found that the long awaited mortgage law would have a positive impact on increasing home ownership, as lenders gained more confidence that the law would provide the needed protection, the Saudi Gazette said in a news report.
It added that these new initiatives, aimed at addressing the housing market across different income groups, will gradually have an impact on the supply-demand imbalances, tilting it towards equilibrium.
“While all income segments will stand to benefit from the enactment of the mortgage law, those within the affluent segment will benefit the most,” the bank said in the report.
However, it noted that other government programs, such as the Real Estate Development Fund, would provide housing assistance to Saudi citizens in the form of interest free loans.
According to figures published in the Saudi Gazette, in 2010 the REDF provided loans to the amount of $1.78bn. The loans are disbursed for financing and construction of owner occupied units, REDF added.
Loan repayments in 2010 stood at $1.57bn. REDF has distributed nearly $45.8bn in loans for the construction of nearly 700,000 homes since its inception.