JV to spend $2bn to build these homes for middle-income Saudis by 2020.
The International Finance Corp said its Saudi Home Loans Co venture is planning to spend SR7.5bn ($2bn) to build 15,000 homes for middle- income Saudis by 2020.
The venture with Saudi partners will provide 2.5 million riyals to build 5,000 homes over the next three years alone, Walid al-Murshed, Saudi country manager for the IFC, said in a telephone interview on Saturday.
“We have around 1 billion riyals in cash and we need to raise the remaining 1.5 billion riyals,” he said. “We haven’t decided yet on how we will raise the money.”
Saudi Home Loans will probably borrow some of the funds from banks and is also considering a sale of bonds or Islamic bonds, known as sukuk, to secure the rest of the money, al- Murshed said. According to IFC estimates, Saudi Arabia needs to build 200,000 homes a year to meet demand from a population that is growing by 2.5 percent annually.
“There is a huge shortage of middle-income housing in Saudi Arabia and lenders don’t have access to long-term finance to allow them to issue more housing loans,” said al-Murshed.
The venture, known as SHL, has spent 1 billion riyals to finance 1,600 new homes over the past two years. The new money is not dependent on a mortgage law currently under consideration by the government, al-Murshed said.
SHL, which was established in 2007, is a joint venture between the IFC, Arab National Bank, Saudi Arabia’s Dar Al Arkan Real Estate Development Co., and Kingdom Installment Co.