• The small housing units is a new culture that the society will accept • The Saudi market is promising but needs more support • Provision of economic houses is not the responsibility of the government alone Anis Muminah, chairman of Ewaan International Housing Company, said the presence of mega real estate development companies would greatly contribute to increasing supply and regulate prices. He said real estate is considered to be the most feasible and most promising of investments. In an interview, Muminah spoke about his ideal future vision to meet the rising demand for houses, the characteristics of the Saudi real estate market and the challenges facing it. Going for real estate investments Q - The real estate industry is one of the fastest growing industries. Do you think this industry is attractive to the national investors? A - The real estate industry has greatly progressed during the past few years. It consists of many sectors. There is specialization in this industry from development, financing and mortgage to the marketing of commercial, industrial and tourist projects in addition to the malls and shopping centers. This is in addition to support activities for the implementation of these projects such as engineering offices, project management, contracting and building materials. All these activities have come under the umbrella of the real estate industry and attracted more investors. With the increasing demand for housing units, the market will witness a big boom for these investments whenever they are properly managed. Real estate investment has good returns and is fast growing and expanding especially with the rise in population and the increase of development projects. As for national investments in this field, I think real estate investment is considered to be the fastest growing, the best and the most feasible of investments among all other commercial, industrial and tourist projects. The Kingdom is witnessing a rapid development in this field. There are enormous opportunities for real estate investments. Migration of capital and investment opportunities Q - There is a migration of Saudi capital, especially in the real estate sector, to Arab and other foreign countries. What do you think is the reason for this? A - There are many reasons for the migration of capital, including the search for investments with quick and feasible returns. There are also the facilities provided by some countries to foreign investors such as tax exemption, provision of skilled labor and the availability of experiences. These countries have ample investment opportunities and the decision-making process is easy and fast. We, therefore, should make the necessary laws and regulations that would reduce the migration of Saudi capital and provide national investors with all possible facilities. I think the future is in the Kingdom. There are a number of international companies and investors wishing to invest in the Kingdom either directly or through partnerships with local companies. The future vision Q - With the increase of the population and decrease in housing units, what do you think is the ideal future vision for meeting the rising demand for homes? A - The population has been steadily growing for many decades. There is a need for about a million housing units by 2020. The Kingdom needs to build more than 150,000 housing units every year according to statistics published by local dailies. Today, demand exceeds supply. The market needs many real estate companies to able to meet this demand. Ewaan International Housing Company is making plans to provide housing units, especially to low and medium-income customers, who represent the bulk of people needing homes. The company will do its best to achieve this goal through the implementation of housing projects with integrated services that will meet their needs and requirements. I think the presence of giant real estate companies in the Kingdom to build houses in various regions will help increase supply. This will help keep prices within a reasonable level. This, of course, is in addition to the projects of the Ministry of Housing and the interest-free loans extended by the Real Estate Development Fund (REDF). The ministry's housing projects and REDF's loans will solve a big portion of the problem and stabilize the market. Housing units Q - The acquisition of small housing units and apartments instead of large villas is a new culture in our country. Do you think society will accept this new culture? A - Looking at the situation in the Arab region in general and in Jeddah in particular, we will find that the majority of the inhabitants are living in apartments, an increasing trend for many years. Now we see a trend toward owning of apartments in Riyadh and the Eastern Province. Low and medium-income families are considering the matter from another angle, which is their purchasing power and their ability to repaying the long-range loans. This is a new issue for society. The look will be different when they become certain that these loans will ensure them with their own houses after a time and that the installments they pay do not go toward rent or for consumer loans and luxurious goods. Owning a home has become a pressing need for many people. This will enable low and medium-income citizens to own apartments or small villas. This is exactly what is Ewaan is working for. Q - Are we ready for the real estate mortgage system? A - The mortgage system will be applied in the Kingdom because it will greatly contribute to the solving of the housing problem for a large number of people. It will guarantee the rights of all those working in the real estate sector. The most important thing here is to make sure that people who ask for loans or want to purchase houses through installments are financially capable of repaying their loans. We should also make sure that the loan seekers are not burdened with other loans and commitments. As for whether we are ready for the introduction of the mortgage system, I do not envisage any problem. This system has been made to protect the rights of all people involved in the real estate sector. The most important thing here is the correct and proper implementation of the system by all the parties concerned. Not one of the parties concerned should be allowed to exploit this system to its own benefit. The system should be flexible, allowing the revision of some of its articles, particularly the lending limit and the amount of down payments. With time people will get used to the system, which will bridge the gap between demand and supply. Requirements of project implementation Q - What characterizes the Saudi real estate market? What are the challenges facing it? A - The Saudi market is characterized by its large size and the numerous areas that can attract investments in housing, commercial, industrial and tourist projects. The market is also characterized by its great demand for houses regardless of their size. This is a demand both for the citizens and expatriates. I do not think that there are big challenges. Rather, there are major requirements for the proper execution of housing projects. The market's need for housing projects should be carefully considered. The real estate investors should stay away from the projects that are not within their specialty. They should also choose the modalities that will make them reach the targeted segments. The marketing of projects should go side by side with their execution. REDF's loans Q - Is the building of economic houses the responsibility of the government alone or should they be constructed through partnerships between the private and the public sectors? A - The government is doing its job through the provision of interest-free loans and the facilities and incentives extended for their timely payment. These are the REDF's loans. This is of course is in the addition to the 500,000 housing units ordered by Custodian of the Two Holy Mosques King Abdullah to be built all over the Kingdom. The private sector should undertake its role through investing in real estate projects, taking into account the purchasing ability of the citizens. The realtors should not focus on projects for high-income citizens only. Low and medium-income citizens, who constitute the majority of the population, do not own private homes. They should be enabled to do so. Housing crisis Q - What are the solutions for the housing problem? A - There are a number of elements that can contribute to the solving of the housing problem. Firstly, the Housing Ministry should embark on the implementation of its housing projects without delay. We wish the ministry all success in its efforts. Secondly, the mortgage system should be applied as soon as possible. Thirdly, the number of investors and the real estate companies should be increased. This can be done through the establishment of cartels and mergers. Fourthly, the focus should be put on the types of houses mostly needed by the citizens. These housing units should be sold to the citizens at reasonable prices. Finally, there should be close cooperation between the Ministry of Housing and the private sector to come up with final solutions to the problem of housing in the Kingdom.
