The Saudi Real Estate Refinance Company (SRC), a subsidiary of the Saudi Public Investment fund (PIF), signed Sunday a partnership agreement with Deutsche Gulf Finance (DGF) to buy real estate portfolios.
The deal was signed in Riyadh under the patronage of Saudi Housing Minister Majed al-Hogail.
The agreement provides long-term mortgages with low profits and short-term financial facilities worth more than SAR2.25 billion ($600 million) in order to inject more liquidity into the housing sector and ensure the stability and growth of the mortgage market in the Kingdom.
It aims at reducing the annual rate of profit on the financing provided to citizens by DGF to 36 percent, which will increase the chances of Saudi families to own their houses.
Under the agreement, SRC will regularly acquire a portfolio of mortgages issued by DGF, thanks to a portfolio purchase program, as well as a short-term Murabaha financing (cost-plus financing) facility that allows warehousing the loans.
SRC CEO, Fabrice Susini told Asharq Al-Awsat that the company targets refinancing 20 percent of Saudi Arabia’s mortgage market, which is expected to grow to SAR500 billion ($133.3 billion) by 2020 and SAR800 billion ($213.3 billion) over the next 10 years.
He stressed that the SRC seeks to increase the rate of 20 percent of the refinancing in the mortgage market and redoubling its efforts in the next phase
Susini also explained in a press conference that the partnership agreement will contribute to pushing forward DGF’s plans to provide affordable home finance solutions to citizens and supporting SRC’s role to continue stimulating the development of the mortgage market.
He pointed out that this deal represents a strong and effective partnership that contributes to achieving the company’s objectives to increase home ownership rates and enable citizens wishing to own their homes to obtain mortgage finance more easily.
Acting CEO of DGF Mohammad al-Dowesh explained that the agreement reflects the continuous cooperation between the two companies to achieve the objectives of the Kingdom's Vision 2030 in raising the rate of citizens’ ownership of adequate housing.
Dowesh said it also represents an extension of the series of initiatives to develop the housing sector and provide the best financing solutions suitable for borrowers at a fixed rate for 25 years.
