Saudi banks’ real estate loans reach $218bn thanks to annual 12% growth

Saudi banks’ real estate loans reach $218bn thanks to annual 12% growth
Urban development and evolving lifestyle preferences are fueling real estate loan increases. Shutterstock
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Updated 06 September 2024
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Saudi banks’ real estate loans reach $218bn thanks to annual 12% growth

Saudi banks’ real estate loans reach $218bn thanks to annual 12% growth

RIYADH: Saudi banks real estate loans reached SR816.83 billion ($217.82 billion) in the second quarter of 2024, marking an annual 12 percent rise, according to official data.

Figures from the Saudi Central Bank, also known as SAMA, indicated that this amount represents approximately 30 percent of the total banks’ loan portfolio for the three-month period.

Retail real estate loans made up the largest share at 79 percent, increasing by 10 percent during this period to reach SR641.72 billion. 

Corporate real estate loans, although accounting for 21 percent of the total, grew at a faster annual rate of 18 percent, totaling SR175.12 billion.

The share of real estate loans within Saudi banks’ total loan portfolios has steadily increased in recent years. According to data from SAMA, five years ago, these loans accounted for about 17 percent of total lending activities.

This figure rose to 18.5 percent in 2021, then jumped to 28.5 percent in 2022, and 29.6 percent in 2023. As of the second quarter of this year, real estate loans now make up 29.7 percent of the total.

This growth is being driven by several key factors, including urban development, evolving lifestyle preferences, and the rise of e-commerce. There is also a growing emphasis on sustainability, a shift towards remote work, demographic changes, and supportive government policies.

In particular, there is a notable increase in demand for various property types, ranging from residential apartments and villas to commercial offices and retail spaces.

Hospitality venues are also seeing heightened interest, as mixed-use developments become more prevalent. These developments blend residential, commercial, and recreational areas, creating dynamic communities that meet a wide array of needs.

Macroeconomic trends such as population growth, urbanization, and economic stability are further bolstering this market.

Additionally, strategic initiatives like Vision 2030, which aim to diversify the economy and attract foreign investment, are providing a robust framework for sustained growth.

Real estate companies in Saudi Arabia are increasingly focusing on affordable housing and sustainable construction, recognizing the long-term potential of these areas.

As a result, Saudi Arabia’s real estate sector stands out as a compelling opportunity for investment and development, attracting both local and international players looking to capitalize on the country’s evolving landscape.

According to a study by Mordor Intelligence, the Kingdom’s commercial real estate market is highly fragmented and competitive, driven by increasing demand for new properties due to growing commercial activities.

Developers compete based on factors such as land banks, property location, and upcoming projects, as well as construction costs, and company reputation.

The study noted that prominent real estate development companies in the market include Al Saedan Real Estate, Kingdom Holding Company, and SEDCO Development.

It also cited Jabal Omar Development Company, Makkah Construction & Development Co., and Dar Alarkan Real Estate Development Co., as well as Saudi Taiba Investment and Real Estate Development Co.

In parallel, home financing is experiencing significant growth, aligning with the government’s goal to increase homeownership among Saudi nationals to 70 percent by 2030.

In 2016, SAMA revised regulations to increase loan-to-value ratios for financing companies from 70 percent in 2014 to 85 percent. 

In 2017, the LTV cap was extended to 85 percent for citizens seeking their first home through banks, and further increased to 90 percent in 2018.

As the government continues to boost affordable housing supply, the creation of the Saudi Real Estate Refinance Company in 2017, a subsidiary of the Kingdom’s Public Investment Fund, has strengthened the provision of mortgage-backed securities for investors.

The demand for real estate financing is expected to grow from SR280 billion in 2017 to SR500 billion by 2026, driven by robust economic growth. SRC plays a vital role in this expansion by making the housing market more accessible to both local and international investors.

According to a study by Deloitte, the lack of refinancing firms in the Saudi mortgage market had previously constrained banks’ ability to expand their loan portfolios within any single sector.

However, the establishment of the Saudi Real Estate Refinance Company has changed this dynamic, allowing banks to package their loan portfolios into mortgage-backed securities that can be sold to investors.

Impact of interest rates




US Federal Reserve building in Washington D.C. Shutterstock

The Saudi real estate market has been significantly impacted by fluctuations in interest rates, which are closely tied to US monetary policy due to the Saudi riyal’s peg to the US dollar.

As the Federal Reserve raised the level to combat inflation, the Gulf Cooperation Council nations, including Saudi Arabia, followed suit, leading to higher borrowing costs across the region.

These elevated interest rates initially created challenges for individuals and companies seeking real estate financing in the Kingdom.

The cost of credit increased, causing potential buyers to hesitate, particularly in a market that was already experiencing rising property prices.

Many prospective homeowners and investors adopted a wait-and-see approach, hoping for a reduction in rates before making major purchasing decisions.

Despite the persistence of the high level, the market has shown resilience and begun to regain momentum. 

Elias Abou Samra, CEO of Rafal Real Estate Development Co., noted in an interview with Arab News in July the market has adapted to the “higher-for-longer” interest rate environment.

Buyers have come to terms with the fact that waiting for a reduction in rates could be offset by further increases in property prices. 

This realization has prompted many to move forward with their purchasing decisions, boosting demand for mortgages and real estate transactions.

Another contributing factor is that, despite the challenges of rising interest rates, the impact has been softened by a significant increase in construction activity across Saudi Arabia’s giga-projects and other major development initiatives supported by PIF.

These large-scale projects have maintained momentum in the real estate market, helping to counterbalance the effects of higher borrowing costs.

In an August statement, the US Federal Reserve indicated its readiness to cut interest rates, expressing confidence that inflation is easing and caution over potential further slowing in the job market.

While the Fed chair Jerome Powell did not specify a timeline or the extent of the potential rate cuts, his comments suggest a possible rate reduction at the upcoming mid-September policy meeting.

There is uncertainty about whether the Fed will implement a more aggressive cut, such as a half-point reduction, instead of the usual quarter-point.

For Saudi banks, expected rate cuts could spur corporate loan growth, while their strong asset quality is likely to mitigate any downside risks in 2024.

Fitch Ratings recognizes the Kingdom’s banks as having the strongest risk profiles among GCC lenders, thanks to robust asset quality, conservative underwriting standards, and strict regulation by the Saudi Central Bank.


Abu Dhabi’s PureHealth agrees to buy 60% stake in Hellenic Healthcare

Abu Dhabi’s PureHealth agrees to buy 60% stake in Hellenic Healthcare
Updated 57 min 52 sec ago
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Abu Dhabi’s PureHealth agrees to buy 60% stake in Hellenic Healthcare

Abu Dhabi’s PureHealth agrees to buy 60% stake in Hellenic Healthcare

DUBAI: Abu Dhabi’s PureHealth Holding has agreed to buy a 60 percent stake in Hellenic Healthcare Group, in a deal valuing the provider of private healthcare services in Greece and Cyprus at €2.2 billion ($2.31 billion).

CVC Capital Partners will retain a 35 percent stake in the business while HHG’s CEO Dimitris Spyridis will keep the remaining 5 percent stake, PureHealth said in a statement, without disclosing a timeline for the completion of the deal.

PureHealth, owned by Abu Dhabi sovereign wealth fund ADQ, has been investing in recent years to grow its portfolio and expand globally.

Last year, it acquired British hospital operator Circle Health Group for around $1.2 billion, while in 2022 it snapped a 26 percent stake in US firm Ardent Health Services.

“Integrating HHG into our portfolio not only reinforces our position in Europe but also creates significant value for our group by contributing to revenue diversification, driving operational synergies, and strengthening our financial performance,” said Shaista Asif, Group CEO at PureHealth, in a statement on the company’s website.

“This move aligns with our vision of becoming a global leader in healthcare, with more than 50 percent of our revenues originating outside the GCC.”

The deal will allow PureHealth to serve a further 1.4 million patients annually, it said, noting the move underscores the firm’s “ambition to diversify its revenue streams and enhance operational efficiencies.”

It is also another step in Abu Dhabi’s accelerating efforts to diversify its economy, as the UAE’s capital invests in fields like technology and health to cut reliance on oil revenues.

AI-powered health care company M42, backed by one of ADQ’s bigger peers Mubadala, last week announced a new operating structure to support more acquisitions and expansion into new markets.


Oil Updates — prices hover near two-week low; weak China data adds to demand concerns

Oil Updates — prices hover near two-week low; weak China data adds to demand concerns
Updated 28 January 2025
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Oil Updates — prices hover near two-week low; weak China data adds to demand concerns

Oil Updates — prices hover near two-week low; weak China data adds to demand concerns

NEW YORK/SINGAPORE: Oil prices ticked up but hovered near a two-week low on Tuesday after weak economic data from China and warming weather forecasts elsewhere soured the demand outlook.

Brent crude oil futures rose by 42 cents, or 0.54 percent, to $77.5 per barrel by 7:30 a.m. Saudi time. US West Texas Intermediate crude futures were up 34 cents, or 0.46 percent, to $73.51. Brent settled on Monday at its lowest since Jan. 9, while WTI hit its lowest since Jan. 2.

China, the world’s largest importer of crude oil, reported on Monday an unexpected contraction in manufacturing activity in January, adding to concerns over global crude demand growth.

“The general tone of caution in the risk environment, coupled with weaker Chinese PMI numbers that cast further doubt on China’s oil demand outlook, may serve as a drag on oil prices,” IG analyst Yeap Jun Rong said.

China’s crude oil demand is also expected to be hit by the latest US sanctions on Russian oil trade. FGE analysts see refineries in Shandong losing up to 1 million barrels per day of crude supply in the near-term amid a ban imposed by the Shandong Port Group on US-sanctioned tankers.

“Alternative crude barrels (to Russian supply) are being sought after at the same time, but they come at much higher costs,” the analysts noted.

Several independent refineries in China have halted operations, or plan to do so, for indefinite maintenance periods, sources told Reuters, as new Chinese tariff and tax policies plunge plants deeper into losses.

India, the world’s third-largest crude importer, also faces disruptions to Russian oil supply, but refiners there are taking advantage of a wind-down period in the sanctions to make purchases until March, the FGE analysts said.

In the US, weather forecasts are for warmer-than-normal temperatures through this week, which is weighing on demand for heating fuels after extreme cold sparked a natural gas and diesel rally in prior sessions.

“Temperatures in both regions (US and Europe) are increasing, allowing for heating fuel demand to slide off some,” StoneX oil analyst Alex Hodes said on Monday.

Broader financial markets were under pressure from a surge of interest in a low-cost artificial intelligence model launched by Chinese firm DeepSeek.

“Losses (in the oil market) appear relatively limited from the turmoil in US tech stocks,” IG’s Yeap said.

Still, caution is likely to persist as the Feb. 1 deadline for US tariffs approaches, with any potential trade restrictions likely to introduce downside risks to global growth, which could translate to downward pressure on oil, Yeap added. 


Oman, India revise deal to avoid double taxation

Oman, India revise deal to avoid double taxation
Updated 27 January 2025
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Oman, India revise deal to avoid double taxation

Oman, India revise deal to avoid double taxation

JEDDAH: Oman and India have finalized an updated protocol to prevent double taxation and curb financial evasion related to income taxes, further bolstering their economic ties.

The agreement was signed in Muscat on Jan. 27 by Nasser bin Khamis Al-Jashmi, Chairman of Oman’s Tax Authority, and Indian Ambassador to Oman Amit Narang, as reported by Oman News Agency.

Al-Jashmi highlighted the importance of the new protocol in strengthening economic relations between the two countries, noting that the agreement is the result of ongoing efforts to enhance bilateral cooperation in the tax sector.

In December, Oman also signed a similar agreement with Tanzania to deepen their strategic partnership.

That deal aimed to foster an attractive investment climate, protect investors from double taxation, and increase transparency in financial transactions.

In October, Al-Jashmi represented Oman in signing a similar agreement with Estonia. The agreement adhered to the standard framework set by the Organization for Economic Co-operation and Development.

According to a statement from Estonia's Ministry of Foreign Affairs, the agreement was designed to provide a stable tax environment for both foreign entrepreneurs investing in Estonia and Estonian businesses expanding internationally.

The ministry emphasized that the primary goal of double taxation avoidance agreements was to foster investment between the signatory countries.

Additionally, the ministry highlighted that foreign investors value the assurance that they will not face a higher tax burden than local businesses operating in the target country.

As of October 2024, India exported $410 million worth of goods to Oman and imported $743 million, resulting in a trade deficit of $334 million, according to the Observatory of Economic Complexity.

India’s top exports to Oman included petroleum products valued at $146 million, processed minerals at $24.4 million, and basmati rice at $15 million. Iron and steel exports totaled $13.9 million, while ships, boats, and floating structures contributed $9.93 million.

On the import side, India’s purchases from Oman were led by fertilizers, totaling $118 million. Petroleum products accounted for $92.5 million, and ships, boats, and floating structures reached $77.5 million. Other commodities amounted to $45.2 million, while crude petroleum was valued at $43.5 million.


Asir region offering further $5.3bn in investment opportunities: top official 

Asir region offering further $5.3bn in investment opportunities: top official 
Updated 27 January 2025
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Asir region offering further $5.3bn in investment opportunities: top official 

Asir region offering further $5.3bn in investment opportunities: top official 

RIYADH: Saudi Arabia’s Asir region is working on securing a further SR20 billion ($5.3 billion) in private investments as part of its transformation into a year-round tourism destination, with significant projects already underway. 

With 7.8 million visitors recorded in 2024, the region is rapidly approaching its formal target of 9.1 million annual tourists by the end of the decade, revealed a senior official. 

In an interview with Arab News at the Real Estate Future Forum in Riyadh, Hashem Al-Dabbagh, CEO of the Asir Region Development Authority, said that private sector investments in the region have already exceeded SR7 billion ($1.87 billion).

“Aside from that SR7 billion of investments from the private sector, we also have another SR20 billion or so that we are working on, and it’s in the pipeline, but it’s not yet realized,” said Al-Dabbagh. 

He added: “So hopefully, between the investments that are realized and the ones in the pipeline, we have from the private sector somewhere around SR27 billion that hopefully is going to happen in Asir.”  

Al-Dabbagh noted that while some of the projects currently in the pipeline are expected to be finalized this year, others are slated for completion in 2026 or 2027, with certain long-term initiatives extending beyond 2030.  

He expressed optimism about the progress of investments in Asir, noting that the region has been “moving full speed ahead” in this area.  

Al-Dabbagh emphasized that the ongoing projects in Asir are primarily driven by private sector investments, while also highlighting significant initiatives led by the Public Investment Fund. 

Among these, he pointed to the Alwadi project, a SR14 billion waterway development located in the heart of Abha.  

The project will include commercial, cultural, residential, and agricultural spaces on both banks, all designed with pedestrians in mind and catering to both locals and visitors.  

“I claim that with that investment, Abha is going to be the most livable and beautiful city in the Arab world as a whole,” Al-Dabbagh added.  

He also highlighted the Al Soudah Development Project, another mega initiative with an investment of SR14 billion.  

“This is in the forest-covered mountains of Asir, where there’s going to be, again, development of hotels and residences, high-end for the most part, in six different areas within Al Soudah,” he said. 

Both projects are expected to remain under development through 2030. 

Al-Dabbagh noted that smaller-scale projects are also in the pipeline which some slated for completion by 2025.  

He further discussed the role of the Asir Investment Co. in spearheading mega developments across the region.  

“AIC has a number of iconic projects in a number of areas, not just within Abha, but in other regions on the coast, in the north, on the mountain ridge, and of course, in Abha as well,” he said, adding that these projects “are going to be announced formally in the next months, in 2025.”  

Al-Dabbagh highlighted that the region’s strategy is focused on transforming Asir into a year-round destination for visitors. 

“The formal target for Asir is 9.1 million annual visitors by the year 2030. I expect this target to be raised,” he said, explaining that the unofficial number of visitors to Asir in 2024 already neared 7.8 million.  

Additionally, he pointed to the broader national tourism target for Saudi Arabia, which was recently increased from 100 million to 150 million visitors, suggesting that regional goals, including Asir’s, are likely to be adjusted upward.  

“Without a doubt, this is going to have an impact on the economic development in the region and on the number of jobs,” Al-Dabbagh added.  

He noted that Asir has traditionally been an exporter of workforce to other parts of Saudi Arabia, such as Riyadh, Jeddah, and Eastern Province, due to limited job opportunities in the region. 

However, he emphasized that the tide is turning. “Now with everything that is happening in Asir, we find that there is a reverse migration, if you like,” he said.  

Al-Dabbagh added that he has observed this shift firsthand within the Asir Development Authority and through reports from larger investment projects, as more local residents are choosing to return to Asir to work on the new developments.   

He noted that Saudi Arabia only opened its doors to international tourism a few years ago, meaning that due to the country’s prior restrictions, “the vast, vast majority” of tourists in Asir were domestic visitors, along with some travelers from Gulf countries, he said.  

Al-Dabbagh added that, while the majority of tourists to Asir are expected to be from Saudi and the Gulf region, the proportion of international visitors is anticipated to grow significantly — from around 1 percent to approximately 10 percent, even as the total number continues to rise.  


Closing Bell: Saudi main index sheds, Nomu gains 

Closing Bell: Saudi main index sheds, Nomu gains 
Updated 27 January 2025
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Closing Bell: Saudi main index sheds, Nomu gains 

Closing Bell: Saudi main index sheds, Nomu gains 

RIYADH: Saudi Arabia’s Tadawul All Share Index dropped on Monday, losing by 13.27 points, or 0.11 percent, to close at 12,372.89.   

The total trading turnover of the benchmark index was SR7.1 billion ($1.9 billion), as 91 of the listed stocks advanced, while 147 retreated.   

The MSCI Tadawul Index also dropped by 6.80 points, or 0.44 percent, to close at 1,538.59. 

The Kingdom’s parallel market Nomu increased, gaining 118 points, or 0.38 percent, to close at 31,014.29. This comes as 40 of the listed stocks advanced while 45 retreated.    

Jabal Omar Development Co. was the best-performing stock of the day, with its share price surging by 10 percent to SR25.85.   

Other top performers included Knowledge Economic City, which saw its share price rise by 9.89 percent to SR16.66, and Makkah Construction and Development Co., which saw a 9.84 percent increase to SR106.    

Taiba Investments Co. and Jadwa REIT Al Haramain Fund also saw a positive change, with their share prices surging by 9.81 percent and 5.78 percent to SR51.50 and SR6.59, respectively.    

Raoom Trading Co. saw the steepest decline of the day, with its share price easing 5.18 percent to close at SR183.    

Nice One Beauty Digital Marketing Co. and Al-Baha Investment and Development Co. recorded declines, with their shares slipping 4.92 percent and 4.26 percent to SR56 and SR0.45, respectively.   

ARTEX Industrial Investment Co. also faced a loss in today’s session, with its share price dipping 4.06 percent to SR16.08 while Lumi Rental Co. saw a 4.01 percent drop to settle at SR76.60. 

On Nomu, International Human Resources Co. saw the highest gain, with a 10.95 percent increase, reaching SR5.98. 

Knowledge Tower Trading Co. followed with a 9.28 percent increase to SR17.42, while Enma AlRawabi Co. reached SR24.44 — a 6.26 percent growth. 

National Building and Marketing Co. and AME Co. for Medical Supplies were also among the top performers, with 5.44 percent and 5.14 percent increases to reach SR189.80 and SR122.80, respectively. 

Mulkia Investment Co. was Nomu’s worst performer of the day, witnessing a 9.86 percent decline to settle at SR33.35. 

Albattal Factory for Chemical Industries Co. and Arabian Food and Dairy Factories Co. also saw declines of 6.25 and 5.91 percent to settle at SR60 and SR94, respectively. 

Academy of Learning Co. and Leaf Global Environmental Services Co. saw drops of 5.71 and 5.08 percent to settle at SR9.58 and SR112.