By Souhail Karam
SHL will provide loans compliant with Islamic law, state news agency SPA reports.
Saudi Arabia has approved the launch of Saudi Home Loans Company (SHL) to tap into a market where four out of five Saudis do not own a home, state news agency SPA said on Saturday.
The Trade and Industry Ministry approved the launch of SHL, which will provide loans compliant with Islamic law, SPA said. The firm will have a capital of 2 billion riyals ($533 million).
Each of Arab National Bank and private housing finance firm Kingdom Installment Company hold 40% in SHL, according to Arab National Bank. Property developer Dar Al-Arkan holds a 15% stake in SHL and the International Finance Corporation (IFC) has the remaining 5%.
Only 22% of Saudis own their houses, SHL's managing director Abdullatif Al-Shelash said earlier this month.
"The kingdom will need some 4.5 million new housing units within the next five years to accommodate its growing population," Al-Shelash said in remarks published by Arabian Business.
SHL will cater mainly for the middle and the poor segments of the Saudi population, he added.
Fuelled by record oil receipts, the kingdom has witnessed a boom in construction and infrastructure projects but realtors say the deficit in housing projects, especially for low-income households, has not been reduced.
They blame the absence of a mortgage law, which has been in the works for years now, as the main obstacle to higher investment in housing projects for the poor.
The Justice Ministry said earlier this year that the mortgage law would soon be issued. (Reuters)