Saudi Arabia is planning to convert the state-owned Real Estate Development Fund into a bank. This move hopes to address the shortage of affordable homes in the country.
In a report by Reuters, the lack of affordable homes in Saudi Arabia has become a major issue for the residents of the country, especially for the young ones who propagated the issue in the social media.
If the plan of conversion is to be approved, the Real Estate Development Fund will be offering financial assistance together with the private sector to provide affordable housing loans to eligible applicants.
The fund has been previously offering interest-free loans for new residential construction. According to the comments given by fund director Yusuf Zughaibi, as quoted by the Al-Riyadh newspaper, the conversion would suggest an expansion of its lending volumes while widening the range of its operations to include mortgages for existing homes.
According to the website of the state-owned fund, the Real Estate Development Fund has 40 branches across the kingdom and a size of 183 billion riyals ($49 billion).
The shortage of affordable homes in the kingdom has been a pressing issue for the last couple of years. In 2011, the government pledged to build half a million new homes during the heights of the Arab Spring uprisings. The initiative has been slowed down, however, by bureaucratic delays and difficulties in obtaining land.
Ever since King Salman had taken the throne, he has done a string of reforms to the economic policy apparatus in order to address the growing crisis of the lack of affordable homes in his kingdom.
King Salman has been distributing authority over other big institutional funds from the finance ministry to different ministries, in an effort to make them more dynamic.
The ruler has also appointed several former businessmen to senior government jobs, including the post of housing minister.
