Saudi Arabia’s Public Investment Fund (PIF) has announced the establishment of the Saudi Real Estate Refinance Company (SRC) to help meet the goal of increasing the rate of homeownership among Saudi citizens to 52 per cent by the end of 2020.

MEED understands that the demand for real estate financing in the kingdom is expected to increase from SR280bn ($75bn) in 2017 to SR500bn in 2026.

Minister of Housing Majed al-Hoqail will chair SRC, the Saudi Press Agency (SPA) said in a report.

SRC is envisaged to stimulate the kingdom’s housing sector by injecting liquidity into the real estate market.  The firm is expected to refinance up to SR75bn of housing projects in the kingdom over the next five years. This could increase to up to SR170bn by 2026.

“The company will act as an intermediary access point for investors, aligning the liquidity, capital, and risk management requirements of real estate mortgage companies, with the risk acceptability and return on equity to meet investor targets,” the SPA said.

The firm is expected to facilitate stability and growth in the kingdom’s housing sector by “injecting liquidity into the secondary mortgage market, improving standards, and facilitating access to local and international financing sources.”

MEED understands SRC’s strategy will include acquiring mortgage funds to "increase financial capabilities and broaden the activities of real estate financing companies." It will also link the investment capital of foreign and local investors with opportunities available in the kingdom’s growing housing market.

The company’s activities will include issuing bonds as securities, supported through real estate mortgage contracts over the short and long term, to real estate financing companies.

SRC will operate under a licence granted by the Saudi Arabian Monetary Authority (Sama) to conduct real estate refinancing activities.