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Real Estate Loans in Saudi Arabia Increase Despite COVID-19

People walk near a banner with instruction on personal hygiene, following the outbreak of coronavirus, at a street in Riyadh, Saudi Arabia, March 16, 2020. (File photo: Reuters)
People walk near a banner with instruction on personal hygiene, following the outbreak of coronavirus, at a street in Riyadh, Saudi Arabia, March 16, 2020. (File photo: Reuters)
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Real Estate Loans in Saudi Arabia Increase Despite COVID-19

People walk near a banner with instruction on personal hygiene, following the outbreak of coronavirus, at a street in Riyadh, Saudi Arabia, March 16, 2020. (File photo: Reuters)
People walk near a banner with instruction on personal hygiene, following the outbreak of coronavirus, at a street in Riyadh, Saudi Arabia, March 16, 2020. (File photo: Reuters)

Despite the outbreak of the novel coronavirus, real estate loans in Saudi Arabia saw a rise by the second quarter, according to a report published by the Saudi Ministry of Housing.

The value of housing loans taken by individuals reached SAR13.8 billion (USD3.6 billion) with an increase of the real estate and construction sectors by 10.6 percent and 8.2 percent respectively compared to the first quarter.

Regardless of the economic damage caused by the COVID-19, real estate loans grew in June compared to the same month by 218 percent.

A total of 67,100 housing units were fully constructed during the second quarter and are ready to use. Riyadh ranked first in this aspect with around 14,400 housing units.

Quarterly data showed a drop in prices of apartments in Riyadh by 0.5 percent and in Eastern Province by 3.8 percent. As for Makkah and Medina, a slight increase of 0.7 percent, and 0.4 percent were recorded consecutively.

In a related context, the Saudi Contractors Authority (SCA) announced a new strategy for 2020-2024 during its fourth general assembly meeting.

The strategy aims to keep pace with the transformations taking place in the Kingdom's contracting sector and to fulfill its part in Saudi Vision 2030 and its various programs.

Through the strategy, the authority has built a vision for the contracting sector that prepares for the future and works to overcome the current challenges.

The strategy takes note of the entry of new official groups; changes in the tasks of some parties who have a direct or indirect influence on the sector; the aspirations of stakeholders and the challenges facing the contracting sector; international best practices and benchmarks; market trends; as well as the future aspirations of the authority.

The updated strategic plan comprises 22 initiatives, of which nine are organizational initiatives concerned with organizing the sector; eight are service-enabling initiatives to develop the contracting sector; four are internal initiatives to complete the internal capacity building and competencies of the authority and achieve financial sustainability; and one initiative is to provide specialized and high-impact services and solutions to the enterprises of the contracting sector, especially small and medium enterprises.

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Business

UN Convention Boosts Confidence in Saudi Arabia’s Cross-Border E-Commerce Transactions

Riyadh, Saudi Arabia (SPA)
Riyadh, Saudi Arabia (SPA)
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UN Convention Boosts Confidence in Saudi Arabia’s Cross-Border E-Commerce Transactions

Riyadh, Saudi Arabia (SPA)
Riyadh, Saudi Arabia (SPA)

Saudi Arabia’s Cabinet, chaired by Custodian of the Two Holy Mosques King Salman bin Abdulaziz, has approved the Kingdom’s accession to the United Nations Convention on the Use of Electronic Communications in International Contracts, bolstering the legal standing of cross-border digital transactions and electronic contracts in international trade.

The 2005 New York convention, drafted by the United Nations Commission on International Trade Law (UNCITRAL), aims to ensure that electronic contracts and communications used in international trade receive the same legal recognition and enforceability as paper-based documents.

The Cabinet decision gives Saudi companies and their international partners a clearer, more reliable legal framework, helping ease digital trade, cut procedural costs and strengthen the competitiveness of Saudi Arabia’s business environment globally.

Legislative environment

The move builds on Saudi Arabia’s efforts to modernize its business legislation and align it with international best practices and standards.

It is expected to make electronic communications easier to use in international contracts and commercial transactions, while increasing trust and legal certainty over their validity and enforceability.

Commerce Minister and Chairman of the Saudi Center for Competitiveness and Business Dr. Majid Al-Qasabi said the Cabinet’s ratification of the UN convention on the reliable use of electronic communications and transactions in international contracts would facilitate global trade and support business competitiveness and its legislative frameworks.

Legal certainty

International trade expert Dr. Fawaz Al-Alami told Asharq Al-Awsat that the significance of the step went beyond recognizing electronic contracts and communications, saying it marked a shift in how trust is built in international trade.

“Today, the speed of completing a transaction is no longer the only measure of competitiveness. Clear legal rules governing it, and the ability of parties in different countries to operate within a common and understandable framework, have become key factors in commercial decision-making,” he said.

Al-Alami said joining the international framework would give Saudi companies greater confidence to operate in global markets, particularly as digital trade and electronic services expand rapidly.

Faster deals

The move also sends an important signal to foreign investors and trading partners that Saudi Arabia is not simply keeping pace with digital transformation, but is building a legal framework suited to modern trade, Al-Alami said.

Its value, he added, would ultimately depend on implementation.

“The clearer, more reliable and less complex electronic procedures become, the more they will reduce the cost of doing business and speed up dealmaking, and in turn strengthen the competitiveness of the Saudi economy,” he said.

Al-Alami said the measure might appear technical, but was fundamentally part of Saudi Arabia’s shift toward an economy that is more open, digital and connected to global markets.

Automated systems

The government’s move is also expected to strengthen trust between Saudi companies and their foreign counterparts.

Negotiations, offers, acceptances and document exchanges can take place electronically under a clearer international legal framework, reducing administrative time and costs, reliance on paper documents and traditional correspondence, disputes over the evidentiary value of electronic communications, and legal uncertainty when dealing with companies abroad.

The convention also addresses key issues, including the time and place at which an electronic communication is sent and received.

It also sets out rules for contracts formed through automated systems without human review at any stage, an increasingly important issue as digital trade and automation expand.

Business

OPEC Further Lowers 2026 Global Oil Demand Growth Forecast

FILE PHOTO: People walk past an installation depicting barrel of oil with the logo of Organization of the Petroleum Exporting Countries (OPEC) in Baku, Azerbaijan November 19, 2024. REUTERS/Maxim Shemetov/File Photo
FILE PHOTO: People walk past an installation depicting barrel of oil with the logo of Organization of the Petroleum Exporting Countries (OPEC) in Baku, Azerbaijan November 19, 2024. REUTERS/Maxim Shemetov/File Photo
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OPEC Further Lowers 2026 Global Oil Demand Growth Forecast

FILE PHOTO: People walk past an installation depicting barrel of oil with the logo of Organization of the Petroleum Exporting Countries (OPEC) in Baku, Azerbaijan November 19, 2024. REUTERS/Maxim Shemetov/File Photo
FILE PHOTO: People walk past an installation depicting barrel of oil with the logo of Organization of the Petroleum Exporting Countries (OPEC) in Baku, Azerbaijan November 19, 2024. REUTERS/Maxim Shemetov/File Photo

OPEC on Wednesday lowered its forecast for world oil demand growth in 2026 to 580,000 barrels per day, a copy of its monthly report showed, marking the fourth straight downward revision.

The producer group continues to see a smaller impact on consumption since the Iran war started than other forecasters such as the International Energy Agency, which expects demand to decline in 2026, Reuters reported.

The Organization of the Petroleum Exporting Countries also raised its forecast for 2027 oil demand growth, according to the report on OPEC's website.

Business

Bank of America Pledges $250 Billion for US Infrastructure Financing

Signage is seen at the Bank of America Tower in Manhattan, New York City, New York, US, November 2, 2022. (Reuters)
Signage is seen at the Bank of America Tower in Manhattan, New York City, New York, US, November 2, 2022. (Reuters)
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Bank of America Pledges $250 Billion for US Infrastructure Financing

Signage is seen at the Bank of America Tower in Manhattan, New York City, New York, US, November 2, 2022. (Reuters)
Signage is seen at the Bank of America Tower in Manhattan, New York City, New York, US, November 2, 2022. (Reuters)

Bank of America said on Wednesday it plans to deploy $250 billion by July 2027 to support US digital and infrastructure projects, a move it says will boost the country's economic growth and help create tens of thousands of jobs.

The Wall Street bank said its "Critical Infrastructure Finance Initiative," launched on the heels of the nation's 250th anniversary celebrations, will provide primary market lending, investments, ‌capital markets services, ‌and banking and advisory offerings.

The announcement underscores how ‌major ⁠US financial institutions are seeking ⁠to capitalize on rising demand for AI data centers, critical minerals and energy infrastructure upgrades.

It comes days after Morgan Stanley said it would facilitate roughly $1.5 trillion over the next decade to finance technology and infrastructure projects.

Last year JPMorgan Chase launched a $1.5 trillion plan to facilitate, finance and invest in industries deemed critical to the US national security and economic resilience, including defense, ⁠energy and advanced manufacturing.

BOOSTING GROWTH, CREATING JOBS

Bank of ‌America's financing will target three areas: ‌digital infrastructure, including data centers and computing; energy and power infrastructure, including renewable generation ‌and energy storage; and core infrastructure such as transportation and natural gas.

"Meeting ‌America's growing infrastructure needs requires mobilizing capital at scale across increasingly interconnected sectors," said Karen Fang, global head of infrastructure and sustainable finance at Bank of America.

"Delivering these projects requires integrated financing solutions spanning corporate and project-level capital in both public ‌and private markets."

The $250 billion target will be measured over an 18-month period from January 1, 2026, to July ⁠4, 2027, ⁠the bank said.

"If we all do our job right, we should be deploying more capital," said Fang, who is also co-head of global capital solutions at BofA, when asked about potential deployment of more capital after July 2027.

Many projects require new infrastructure to be built before becoming operational, she said.

In the United States, infrastructure construction loans typically have terms of five to seven years. Once projects are completed and operating, they are often refinanced with longer-term debt lasting 10, 15 or 20 years, Fang said.

She said greater infrastructure investment would help drive economic growth and create long-term jobs.

"Infrastructure spending will lead to economic growth and prosperity," she said.