Real estate development and mortgages are two investments in which Sheikh Abdullatif Al Shelash says he’s well versed. The Saudi Home Loans board member and partner in Alaqtar Real Estate Development Company shares that the Saudi real estate market is heating up and that mortgages in Saudi Arabia are just getting started.
“Saudi Home Loans was the one that first ignited the industry,” Sheikh Abdullatif Al Shelash explains.
While the total value of homes sold in Saudi Arabia climbed by 6% in the first three quarters of 2022, prices in some of the most affluent pockets of the capital, Riyadh, soared more than 40% year over year, reports Arab News.
Over the past four years, homeownership in the Kingdom has jumped from 47% to 60%.
While Abdullatif Al Shelash says Alaqtar and Saudi Home Loans have been innovative leaders in Saudi Arabia’s move toward a more significant number of homeowners, the Kingdom itself is becoming a hot spot for finance and technology. The World Fintech Show was held Dec. 5-6 at the InterContinental in Riyadh. Featuring panel discussions on open banking and financing options for the future, the conference celebrated Saudi Arabia’s push for progressive solutions to the challenges of modern living.
Demand for Home Loans in Saudi Arabia Is Increasing
Riyadh is also becoming known as a major financial, energy, and tourist hub. While real estate demands in the metropolis are rising, Abdullatif Al Shelash says he and Alaqtar are focusing on second-tier cities where there’s an even more substantial growth potential. He says Alaqtar is constructing 2 million-square-meter developments in Buraydah in the Al-Qassim region.
“It’s catered more toward middle income,” Abdullatif Al Shelash points out.
Innovation is at the forefront of Saudi development. Construction on Neom’s The Line is already underway in the Kingdom. Some are referring to it as the world’s greatest megaproject. In July 2022, initial plans for the futuristic city were revealed. It proposes a totally new way of living with no cars inside the city and all of the energy produced through wind and solar farms.
The Line is slated to be a zero-carbon urban destination. Abdullatif Al Shelash says it’s a foreshadowing of what could be coming to the Kingdom in terms of real estate. The Line will eventually be home to 9 million people.
Abdullatif Al Shelash adds that cities such as Riyadh, Jeddah, and Dammam could be ideal locations for new, futuristic developments since there’s so much room for growth.
“The existing infrastructure in … older cities [such as Singapore, Hong Kong, London, and Paris] will not allow you to really do something that you would do in new urban cities,” Abdullatif Al Shelash observes.
Abdullatif Al Shelash Discusses How Mortgages Paved the Way for Saudi Homeowners
When it comes to purchasing a home, especially in Saudi Arabia, Sheikh Abdullatif Al Shelash reiterates that mortgages are the wisest way to go.
“[The] real estate sector has been the second biggest sector after oil petrochemicals in Saudi,” Al Shelash adds.
The graduate of Purdue University in Indiana says he wants to continue providing the Saudi people with more than one type of mortgage option and has reaped the benefits of mortgages himself. He says all the homes he’s purchased over the years have been bought through mortgages. “I think my cash will be much better utilized somewhere else instead of really just put it as equity in the house,” the financial expert shares.
Although mortgages weren’t legal in Saudi Arabia until 2012, it’s a financing method that’s gaining momentum in the region, according to Al Shelash. “Previously, most Saudi people tended to think that buying a house and taking a mortgage of 20 years is a big burden,” Abdullatif Al Shelash says.
That has since changed, thanks to brands such as Saudi Home Loans providing innovative home financing solutions and a high level of customer service.
Housing demand in Saudi Arabia is projected to skyrocket by 50% within the next eight years, according to business advisory service PwC Middle East. Saudi Arabia is also in the midst of adding 1.2 million new homes.
“The government’s robust policies and initiatives, including the activation of numerous financial products, is propelling the sector forward, addressing the key challenges faced by the housing market, and making homeownership a possibility for new generations of Saudis,” PwC Middle East said in a recent report.
Partnering more closely with the private sector will be another key catalyst for the expansion of homeownership throughout the Kingdom of Saudi Arabia.
As Saudi Arabia continues its mission to steer away from its economic dependence on oil, real estate is an important growth asset. A tighter lens on green energy initiatives is another driving force in the future of Saudi Arabia.
Saudi wants 50% of its power generation to come from renewable energy as part of the government’s Vision 2030 initiative. Saudi Arabia is also seeking a tourism boost in 2023 with the Red Sea Project, an ambitious eco-minded tourist attraction development.
Redseaglobal.com describes it as “a brand-new luxury regenerative tourism destination along the west coast of Saudi Arabia surrounded by the world’s fourth-largest barrier reef system and spanning over 28,000 square kilometers,” across “its archipelago of more than 90 untouched islands.” Opening its first phase next year, it will eventually be the site of 50 hotels, 8,000 rooms, about 1,000 residential properties, and an international airport. With 75% of the destination’s islands being preserved for conservation, it’s going to offer diving, volcano exploration, boating adventures, bird-watching, stargazing, and cultural expeditions.
“We hope our pioneering approach to development, which sees us act first and foremost as global corporate citizens, can provide a clear blueprint for like-minded organizations to follow,” Group CEO of Red Sea Global John Pagano said in a statement. Saudi Arabia’s Red Sea Global is also financially fueling Saudi with 770 contracts worth around $4.9 billion to date.
“We want to prove to the world and our peers in the tourism industry that creating world-class destinations can go hand in hand with protecting and enhancing the environment,” Pagano said.