By Benjamin Millington
Property firm official says few of Al Khobar Lakes customers can currently close deals.
Emaar Middle East could “double or triple” the number of sales at its Al Khobar Lakes project if the Saudi Arabian government introduces its proposed mortgage law, it was reported on Tuesday.
“We have a lot of customers coming to Al Khobar Lakes sales centre, in fact there is often a queue of customers, but when it comes to closing deals very few have the financing power to close,” Emaar’s head of sales and marketing Akram Omar told Construction Week Online.
“Until today 100 percent of our customers are relying on their own savings and resources. This is really hard for most people and keeps us within a small segment of the market.”
Developers, as well as the Saudi people, have been waiting several years for the government to approve the new mortgage law, which is expected to provide a clear regulatory framework for mortgage lending.
“Now in the market there are some finance options, but the rates are unfair,” said Omar.
“When there is a clear mortgage law in the market it will control the relationship between the financial institutions, the developer and the end user. This triangle will function smoothly under a lot of clear guidelines, now it is not.”
Last year several government officials announced that the law had been approved and would be introduced within 2009. Now industry insiders expect the law to be enacted within the first quarter of 2010; however there has been no confirmation from the government.
“Once…the mortgage law comes out, then Al Khobar Lakes will sell high and prices will inflate and it will look completely different,” said Omar.
“I would expect the number of sales to more than double or treble the number which is happening today.”
The first phase of the Al Khobar Lakes development will cost around US $1.2 billion (SR4.6 billion) and see the construction of more than 2000 villas near the city of Al Khobar on Saudi Arabia’s Eastern coast.
Construction of the first 242 villas began in September 2008 and construction of a further 232 villas and the grand mosque will start this month. The entire project is expected to be built out by 2015.
Emaar Middle East is a joint venture company between Dubai’s Emaar Properties and Saudi Arabia’s Al Oula Real Estate Development Company.
Please this article was written because of the significance of the NEW Saudi law. Now we read it because of it, right? You include it in the title because the article was based on it, correct? - then what heck is the new law? - how can it triple sales? - what is the difference between the new and the old law? other than "provide a clear regulatory framework for mortgage lending" - this is good business news, if you don't have staff in Saudi Arabia I am positive there is someone at Emaar in UAE that can explain what the law means. It is Emaar's interest to answer these questions so give them a call. When you mention these laws or the celebration of Burj Khalifa few weeks ago, if you don't provide in dept information, remember there will be follow up questions (like what law? or what time will celebration start or what TV will air it?) so be prepared. I think Arabian Business is a source of information not a social network, right?
This is irresponsible reporting. By giving catchy headlines you are simply try to fool readers. AB should restraint from such flashy news where no truth is invloved. Saudi Arabia doen't know what mortgage is then how can they formalize any law on mortgage and you are reporting that new law will triple sale. What a joke.......
I think that what was meant in this article, in case mortgage law is out to clear and set regulations for realestate financing, off-plan projects will get a boost in sales,in case lending the end user (home buyer) on a sales contract basis till partial land deed purchased is ready.. In This case for sure off-planned projects,which is Emaar business model through building entegrated communities,will go forward. This will be a win-win situation for poperty seekers and developers
@Alaa: Yes that is what they mean... however how they come with such a nice, concrete, round number like "3x" is a mystery. The only sensible way I can think of is through historical comparables, that is what happened in other markets when similar laws were introduced. Given the lack of detail i would suspect that this came out of an "epiphany" (yes, being sarcastic here) by either one executive or a consultant. Given the story of this region, specially RE you need to underdstand that some people may be genuinely sceptical. We had a similar discussion in other news and AB position is that they will report on any statement from a company without judging it. Even though it happens everywhere to a certain extent here is much more naked s business journals essentially just publish the messages from the PR agencies. Kudos to AB for at least being clear about this (some people did not seem to get it). And yes, that happens everywhere, but here PR agencies have it really easy and newspapers make no effort to do their own analysis. For that buy the FT or the Economist, they screw up from time to time but at least they try hard.