A new home financing firm has been launched in Saudi Arabia with the aim of raising the low levels of home ownership across the Gulf kingdom.
Bidaya Home Finance, which will begin operations with a capital of SR900 million ($240 million), is a joint venture between the Saudi Finance Ministry's Public Investment Fund and Jeddah-based Islamic Corporate for the Development of the Private Sector (ICD).
Licensed under the Saudi Arabian Monetary Agency (SAMA), the company aims to make financing more readily available in a kingdom where home ownership levels lag behind the global average of 70 percent.
Government data shows home ownership among roughly 21 million Saudi citizens at 60 percent. But the International Monetary Fund has estimated that excluding people living in "traditional" housing, the rate is 36 percent.
In addition to addressing the financing side, the Saudi government has also sought to increase housing supply. Last month, the cabinet imposed a 2.5 percent tax on unused urban land to incentivize owners to develop empty plots.
Khaled bin Mohamed Al-Aboodi, chairman of Bidaya Home Finance, said: "Bidaya was established with the primary purpose of enabling home ownership. Our role as a facilitator will aim to address the economic and social issue by increasing access to finance for middle-income home buyers, and thereby significantly contributing towards the sustainability of the housing sector in the kingdom."
Bidaya said it was the first real estate finance company to be granted mortgage finance licence by SAMA in December.
"We at Bidaya are committed to playing our part by streamlining mortgage finance end-to-end processing, short turnaround times, using innovative mortgage technologies, and an engineered approach to evaluate customer creditworthiness which we truly believe lies at the core of further developing Saudi mortgage market," added Mazin bin Ahmed Al Ghunaim, CEO at Bidaya Home Finance.
The company said its short-term goal is to open three service hubs in Riyadh, Jeddah and Dammam. Bidaya is also set to launch its digital presence before the end of 2016.