Real estate fund gives 1.2b riyals in home loans

Riyadh: The Real Estate Development Fund (REDF) has approved loans to build 5,416 homes in towns and villages across Saudi Arabia.

The loans, distributed to 4,513 people, were worth around 1.2 billion Saudi riyals. The Real Estate Development Fund (REDF) was established by a royal decree in 1974.

The fund extends easy term and interest-free loans to Saudi citizens who already on a plot of land.

Saudi Arabia is facing an uphill battle to provide new homes.

An enormous influx of people from remote rural and desert areas into the towns and cities, coupled with six million expatriates is creating a supply-demand bottleneck.

Rapid expansion

Saudi Arabia's population is expanding rapidly, estimated in Riyadh alone to be growing by eight per cent a year.

The real estate and construction sectors are now considered the second biggest sector of the economy after oil.

This boom has been driven by a number of factors, including a surge of petrodollars that are being ploughed into real estate projects as well as the increased flow of foreign investment into the country, made easier by The Foreign Investment Law, which guarantees non-Saudi investors the right to buy land.

The Ministry of Planning and Economy has previously said that Riyadh alone will face a shortage of 270,000 housing units over the next few years.