The Real Estate Development Fund (REDF) may become the financial guarantor for interest-free home loans for citizens, according to its recently produced strategy, reported Al-Madina Arabic daily newspaper recently. Sources told Al-Madina that the strategy includes new regulations for the REDF to facilitate loans of up to SR500,000 for citizens; and for the greater involvement of the private sector in the home-loan industry. According to the new strategy, banks and non-banking financial institutions will be asked to provide interest-free real estate loans to citizens. The REDF will be the financial guarantor and pay the installments of loan defaulters. The REDF will be able to increase its funds by making local and foreign investments, sources added. The REDF will have to restructure itself in the form of a real estate investment bank and will have to formulate deals with financial institutions instead of dealing with individuals and families, the sources pointed out. This proposed bank will act as a funding channel and play the role of an intermediary between public and private real estate companies, and financial institutions and public and private banks. Meanwhile, it is estimated that the housing sector needs investment of SR1.5 trillion to build 32 million new residential units between 2005 and 2020. Similarly, annual investments worth SR64 billion will be needed to build 145,000 new residential units every year. Since its inception in 1974, the REDF has financed over 700,000 residential units.
