Saudi Investment Fund eyes mortgage finance

NEW LAW: Saudi's new law could open up home ownership to more of the 25m population in the most-populous Gulf Arab country. (Getty Images)

Saudi Arabia's Public Investment Fund (PIF) said on Tuesday it plans to venture into mortgage financing, in anticipation of a mortgage law expected to be completed this year.

"I think this is one of the priorities of the public investment fund. We only hope for the mortgage to be issued," PIF secretary-general Mansour Al Maiman told an investment conference, in response to a question at a forum.

The PIF is the finance ministry's investment arm. Finance Minister Ibrahim Al Assaf said in February a mortgage law that has been for years in gestation would be implemented this year.

The new law could open up home ownership to more of the 25 million population in the most-populous Gulf Arab country, less than a third of whom currently owns property.

A draft law, which has been in the works for almost a decade, was approved last year by the advisory Shura Council and is now being examined by the council of ministers, Assaf said.

A surge in construction costs, land speculation coupled with a lack of bank financing and poor government assistance have aggravated a housing deficit estimated at some 1 million homes and driven rents higher.

The low home-ownership ratio has for a long time exposed some of the weaknesses of Saudi Arabia's wealth distribution policies, at least on a regional scale.

Local banks have been looking forward for the mortgage law to be enacted because of the huge business potential that it is set to unlock.(Reuters)

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