The Government of Saudi Arabia has finished working on three of the five mortgage laws that it had finalized to ease the shortage of housing in the country. Outlines of the three new regulations were posted Sunday, Feb 24, on the official website of the Saudi Arabian Monetary Agency (SAMA).
According to a real estate report, it was estimated that Saudi Arabia needed a minimum of two million homes by 2014 to keep up with the increasing population and demand. To cater to the rising demand the government plans a mortgage law package and other initiatives that would encourage foreign real estate players to invest in the country.
The three outlined legislations include- Regulations of the real estate financial law, Regulations of the financial lease law and the Regulations of the law on supervision of finance companies.
The decade-long debated laws have now been compressed into a package of five regulations, which will come into effect after all the acts are completely sketched out in another few weeks, reports Daily Star.
A Standard and Poor report stated that the new laws will completely change the face of home loans in the country. Currently, loans are extended to buyers based on their salaries. Interest rates are also automatically deducted from the buyer's salary. With the new mortgage laws, property-secured lending will increase. The laws will also help domestic banks increase their loan activities. Home financing will now be a good business opportunity for the local financial institutions.
The laws will also help the country pull itself out of the housing shortage by aiding investors and buyers register for mortgages. The new rules could also increase residential lending annually by $32 million, reports Bloomberg.
Investment and growth opportunities in the country are rising by the day. The tourism and hospitality industry rake in large shares of profits to the region. According to Arab News, the real estate investment in the city of Mecca (Makkah) rose to 45 percent in the year of 2012.
"It has been forecasted by the Saudi Commission for Tourism and Antiquities (SCTA) that among the most exciting opportunities expected to emerge in the near future will be in the Saudi hotel and hospitality sector," Hussein Al-Harithy, managing director and vice president of the National Exhibitions Company, said to Arab News.