London: Self-made Saudi Arabian billionaire Shaikh Ghassan Al Nemer is on a mission to entice foreign investors back to his burgeoning domestic real estate market, which he says is just as safe as buying gold.
The Dammam-born owner of conglomerate Ghassan Holding Group, who made his early fortune in gold trading, believes investors chasing costly London assets could buy better in Saudi, the frontier Gulf market in which many investors fear to tread.
Such is his confidence in the prospects of the kingdom's real estate market, the property-to-precious metals mogul has boldly offered to underwrite any foreign property investment that fails to deliver double-digit growth in the next two years.
"If an investor is working for profits, the Saudi market is certainly a better option than London," Al Nemer told Reuters.
"I advise UK buyers to seriously consider investment in Saudi. They will see big profit and a big future in it. And I will happily be their guarantor," he said.
The concept of safe-haven investment and Saudi real estate appear unlikely bedfellows after years of fruitless talks to set up a transparent mortgage market and improve landlord rights.
Al Nemer admits he has no idea when the long-awaited Saudi Mortgage Law will be passed but if economic forecasts prove true, the 47-year-old father of five will not be out of pocket.
Latest analysis from Moody's Investors Service described Saudi Arabia as "one of the brighter spots" of the GCC property market, while research from NCB Capital, the kingdom's largest investment bank, suggests Saudi Arabia is grappling with "considerable excess demand" in many market segments.
Trailing behind
Despite its vast petro-chemical wealth, this unsated demand for homes, hospitals, schools, malls, offices and infrastructure has left the pace of urbanisation and the day-to-day quality of life for the average Saudi citizen trailing behind territories like Bahrain, Dubai and Oman. The demand-supply imbalance is likely to worsen if GDP expands in line with forecasts for 4 to 4.4 per cent growth per year between 2010 and 2012, NCB Capital research shows.
Foreign real estate investment is vital to help domestic property players address this massive shortfall, Al Nemer said, predicting price growth in excess of 30 per cent.
"This is a virgin market and there's a lot of development that needs to be done. That is why I have 90 per cent of my business in Saudi and only 10 per cent outside," he said.
Ghassan Holding hopes to grow its land and property portfolio by 50 per cent to 4.5 billion riyals (Dh4.4 billion) this year. It also plans to invest up to £250 million (Dh1.3 billion) in central London development.
While Abu Dhabi and Dubai property companies are already beating a path to the kingdom, most Western investors in the region are still reeling.
Freefalling property values have choked overseas property investor interest in the Middle East, particularly Saudi Arabia, seen by many as the region's most economically sound market but also the hardest to break into.
This partly explains why prices are almost 60 per cent below the Middle Eastern average, NCB Capital estimates show.
Saudi authorities are making strides to correct this reputation, Al Nemer said, earmarking 7 billion riyals to help pay for lawmaking and improvements to the court system to clarify and uphold foreign ownership rights.
"It's very important to note how the system of government in Saudi is changing.
"Even though it is a kingdom, the important decisions on reform now all go through the Saudi parliamentary system to be approved," he said.
"I have not seen any foreign investor have their rights taken away. Don't think that I am saying this to you just because I am a Saudi. This is what I see," Al Nemer added.
Independent venture
Indeed, as the keen camel rider and racehorse owner points out, the kingdom is mulling reforms to join the few territories in the Middle East in which foreigners are allowed to purchase property independently without the need for a local sponsor.
Al Nemer says Saudi Arabia's existing wealth means its rulers have no need to pursue short-term speculative gains.
"... The mentality of the king is legacy. He is thinking of the future of the country, not just short-term profit."
