Business | Banking
Saudi banks focus on marketing real estate investment funds
Saudi banks, through their financial arms, are set to market new real-estate investment products.
- By Mariam Al Hakeem, Correspondent
- Published: 00:43 May 9, 2008
Riyadh: Saudi banks, through their financial arms, are set to market new real-estate investment products.
One of such products is a Sharia-compliant Global Real Estate Investment Fund, which was instrumental in opening up of vast investment horizons in front of the banks. These funds fetch huge revenues for all those involved - investor, middleman and the bank, which is the manager of the fund.
The fund trades in the stocks of the most prominent publicly listed companies around the globe whose activities are Sharia-compliant and related to real estate business, such as the rental, maintenance, management and development of offices, hospitals, shopping malls, stores, restaurants and hotels.
They provide investors with an easy and convenient opportunity to reap the rewards that real estate can offer by investing in the shares of real estate companies, rather than becoming involved in the costly and time consuming process of the direct buying of properties. The advantage in this approach is that the fund offers more liquidity to the investor than real estate property.
Features
Spelling out the salient features of these funds, Dr Yousuf Al Salim, a Saudi professor of economics, said that the most significant advantage of the fund is diversification of investments through geographical distribution of capital aimed at reducing risks and protecting capital.
He was speaking to reporters on the sidelines of the Riyadh Exhibition for Real Estate and Architecture Development.
Experts taking part in the event said that the Saudi real estate market would continue to witness robust growth till 2009, and this was mainly attributed to the construction boom and huge cash liquidity.
They said the size of the Saudi real estate market is amounted to 1.2 trillion riyals and the market was able to achieve a fixed capital growth of 40 per cent between the years of 2000 and 2005.
The experts see an unprecedented growth in the Saudi real estate sector over the coming 10 years and there would be a demand for 2.9 million housing units over the coming 20 years.
"Nearly 40 per cent of Saudis [six million] own houses of their own while the remaining eight million [60 per cent] are living either with their parents or at rented houses. Also, 1.1 million houses needed renovation," one of the experts said.
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