Saudi Arabia’s mortgage market is the least developed among the six Gulf Cooperation Council states almost a year after advisers to the king approved an overhaul of the mortgage law, CBRE Group Inc. said.
“Saudi Arabia has the largest real estate market in the GCC, but the least developed mortgage market,” CBRE said in a report today. “This has resulted in a shortage of owner-occupied residential housing, particularly at the lower end of the income scale.”
A package of reforms aimed at boosting private mortgage lending hasn’t taken affect a year after the Shura Council agreed on final amendments and passed it to King Abdullah Bin Abdulaziz. CBRE said the delay is contributing to low mortgage lending in the kingdom, where only 2 percent of home purchases have been financed through mortgages. That compares with 17 percent in the United Arab Emirates and 70 percent in the U.K.
The Saudi monarch pledged to spend more than $82 billion to fund homebuilding last year as political unrest swept the Middle East. The kingdom had about $150 billion worth of delayed public projects as of December 2011, Los Angeles-based CBRE said, citing the Jeddah Chamber of Commerce and Industry.
Contractual disputes, high prices of construction materials, bureaucratic difficulties and a lack of manpower have caused the delay, CBRE said.