Taif represents Saudi Arabia at UNESCO Creative Cities literature network meeting in Slovenia    Saudi Arabia joins global initiative to strengthen independence of supreme audit institutions    Saudi Arabia graduates 3,948 security personnel after completing training in Riyadh and Makkah    Government launches platform to offer residential land in Riyadh at SR1,500 per sqm    GCC–Russia Ministerial Meeting condemns Israeli aggression against Qatar    Belarus pardons scores of prisoners 'at the request' of Trump, Lukashenko says    Ryan Routh cut off by judge as trial over attempted Trump assassination begins    South Korea workers detained in US raid head home    Summer 2025 sees 32 million tourists in Saudi Arabia with over SR53 billion spending    Al-Futtaim BYD KSA hosts first Super Hybrid Tech Day in Saudi Arabia First event of its kind in the region showcases breakthrough super hybrid technology    Saudi Industrial Production Index rises 6.5% in July 2025    King Charles and Prince Harry finally reunite after 19 months apart    PIF chief says Saudi transformation could outpace China's, outlines 'filtration' investment process The Fund to unveil its next five-year strategy soon    Anastacia: Arnold Schwarzenegger made me sing Whatta Man 12 times    Thousands pay their last respects to Giorgio Armani, private funeral on Monday    French doctor goes on trial for poisoning 30 patients, 12 fatally    The key to happiness    Mike Tyson and Floyd Mayweather Jr. set to meet in exhibition boxing match in 2026    Al Hilal sign Turkish defender Yusuf Akcicek on €22m deal until 2029    Al Qadsiah sign German midfielder Julian Weigl to strengthen defensive midfield    Al Ahli secure Flamengo starlet Matheus Gonçalves in long-term deal through 2027    Sholay: Bollywood epic roars back to big screen after 50 years with new ending    Ministry launches online booking for slaughterhouses on eve of Eid Al-Adha    Shah Rukh Khan makes Met Gala debut in Sabyasachi    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Sidra Capital plans mortgage company
Published in The Saudi Gazette on 16 - 07 - 2012

RIYADH – Saudi Arabian investment bank Sidra Capital plans to set up a housing mortgage firm with SR1 billion ($267 million) of capital to tap growth expected after the Kingdom passed a law covering mortgages, a senior executive said.
Sidra, which is 20 percent owned by Kuwait's Aayan Leasing and Investment Co., said the firm would be jointly owned with many shareholders and that the Saudi government's Public Investment Fund (PIF) would have a sizeable stake in it.
"This was an initiative in 2009 that was postponed until passing the (mortgage) law. Now we already called for a meeting for the founding shareholders and our technical partner will be one of the big banks in Canada," Hani Baothman, Sidra's managing director and chief executive, told Reuters in a phone interview. He declined to name the Canadian bank.
"The capital will be SR1 billion. We are currently waiting for the regulations. PIF will hold a sizeable stake in the firm. Sidra's stake will be sizeable in relation to the size of equity - it will not be 3 to 5 percent but above."
After over a decade of study, the government approved at the start of this month the country's first law permitting home mortgages. Finance minister Ibrahim Alassaf said the law would be implemented within 90 days, after the central bank completed designing its own rules for the sector.
"The law is a very good step in the right direction, but there are still many challenges to tackle. The first benefit is that Saudi households will have the ability to borrow funds at a longer term of 15-20 years," Baothman said.
"The only problem is the extremely high prices. Banks do not lend at an APR (annual percentage rate) but at one flat rate that does not decline, so you end up with an astronomical figure."
Baothman added that the law would encourage the formation of several companies to compete with banks in mortgage financing, but this could not happen without an active sukuk market to provide such companies with the liquidity necessary for lending.
"Banks use medium- to short-term deposits to finance mortgage opportunities while companies should have this done through the sukuk market. The Saudi investment market has suffered from excess liquidity - by introducing the sukuk market, the excess liquidity will be utilized as demand is there and it is strong."
Baothman said the first impact of the law would be seen on the real estate development side, not on the financing side, as companies would target the middle-class segment of the market where demand was concentrated. He said companies would develop affordable units that matched the size of loan which these consumers could obtain. This would be around SR1-1.5 million, he added. "Developers will make sure to target this mainstream so they won't buy land at any price. All developers now have a kind of target to deliver and land prices will be corrected by the rise of demand. It was speculative, but now people will start calculating on paper."
Sidra is also looking to expand its investment in Britain's real estate sector through an Islamic Shariah-compliant fund. – Reuters


Clic here to read the story from its source.