Mortgage market in Saudi Arabia size less than 5% of GDP

Yasser Abu Ateek, CEO of Dar Al Tamleek talks about outlook for the mortgage market in Saudi Arabia.

He says, “It is very small. As I said there are 200 thousand contracts out of 4.6 million units and if you look at GDP it doesn’t represent more than 5% currently. If you compare that to the UAE, there it represents 30%. We still have potential for growth. Our average market share was around 10% in the last 5 years.”

“Al Rahji is the largest player in the market because it is perhaps the largest in retail. HSBC is also a large player along with Riyadh Bank. These have the largest share of the mortgage sector,” he adds.

“It is still a small portion of the financial market, the total outstanding in mortgages is something like 90 billion riyals, which is nothing really; it doesn’t even represent 10% of the total assets in the financial sector. Long term funding is a real challenge. The government is establishing a refinance company to provide this liquidity, so things will look better in the future. Right now the legal framework is protected by regulations. In the past we used to work without having any legal protection, we did our best to protect ourselves. Right now there is a clear regulation. Now the financing and funding aspect is being developed as well as the supply. These three elements were lacking in Saudi but they are now coming into the market,” he concludes.