RIYADH, March 19 Saudi Arabia's central bank
plans to launch a real estate refinancing company with 5 billion
riyals ($1.3 billion) of capital to help develop the kingdom's
mortgage market, local media quoted its governor as saying.
The company will be launched through the Saudi government's
Public Investment Fund (PIF) or its subsidiaries, local daily
Iqtissadeya cited Saudi Arabian Monetary Agency Governor Fahad
al-Mubarak as saying.
The PIF was established in 1971 to provide financing support
to important development projects that cannot be implemented by
the private sector alone.
Last November, the Saudi central bank said it was studying
draft regulations that could see the creation of a company
similar to collapsed U.S. firm Fannie Mae, established by the
Washington in the 1930s to finance the U.S. mortgage market.
"We studied the successful experience in other countries in
terms of mortgage," Arab News on Tuesday quoted Mubarak as
telling an economic forum in the western port city of Jeddah.
Central bank officials were not immediately available to
November's draft said the new firm, with a minimum
registered capital of 2 billion riyals would have to stay
majority state-owned but real estate financing firms would be
allowed to acquire stakes up to a combined total of 30 percent.
After over a decade of study, the government last June
approved a law allowing home mortgages to help reduce a housing
shortage in the world's top oil exporter, one of the main
drivers of inflation in recent years.
The law followed King Abdullah's decision in 2011 to build
500,000 housing units for Saudis over several years as part of a
$110 billion fiscal package aimed at soothing social tensions at
home as unrest spread through the Arab world.
Earlier this month, Mubarak said he expected a large but
gradual growth in mortgage finance activity in the kingdom,
adding it would be based on studying risks.
Analysts say the desert kingdom needs to build up to 275,000
new homes a year for the next five years to satisfy demand
pinned at about 1.65 million new homes.
Some banks already offer housing loans, but these must be
secured against salaries, making them available only to
well-paid Saudis employed by the country's leading companies.