Saudi Arabia's economy is supported by strong fundaments in 2010, though global economies, especially in Europe, will continue to show difficulties and while there is improvement in the US, their problems are far from over, Hasan Al Jabri, managing director and head of Investment Banking at NCB Capital, said at the recently concluded Cityscape Jeddah. Emerging markets continue to show growth although combined with some fears of inflation, he added. Al Jabri pointed out the three key drivers of the Saudi economy, namely stable oil price levels, strong government expenditure and the increasingly important role of the private sector. After reviewing the ups and downs of the global and GCC real estate markets, Al Jabri focused on emerging markets stating: “The outlook for other emerging markets, including Saudi Arabia, is much more solidly supported by strong fundamentals. Focusing on the Saudi real estate market, he said “the outlook for the Saudi market is favorable with economic activity benefiting from the oil price recovery, continued government stimulus, fundamental demand in the housing market , gradual relaxation of bank lending, expected timely implementation of the mortgage law, more active and experienced private sector real estate development companies, and excitement of investors to invest in real estate as a rewarding asset class.” He noted that progress of some of the economic city ventures will help growth in the real estate sector and that real estate in the Kingdom is different than the rest of the GCC. Here, it is driven by strong demand fundamentals, especially when it comes to lower middle and low income housing. “There is increasing interest in investing in real estate as an asset class and investors are going back to basics, focusing on sustainable income rather than short term capital gains.” Commenting on mortgage financing, Al Jabri said “NCB recently estimated that annual residential mortgage finance in KSA stands at barely 1 percent of GDP compared to 66 percent in the US and 71 percent in the UK stressing the importance of implementing the mortgage law and developing the secondary market.” “The development of the secondary market is extremely important and we need to standardize the products and criteria and make them conservative to avoid falling into the issues in the US and Europe,” he pointed out. NCB Capital is the largest investment bank in Saudi Arabia with SR44 billion ($12 billion) assets under management and one million customers.
