Idle land fees contribute to development of 162M sqm
The Idle Lands Law, before the recent amendments, contributed to the development of more than 162 million square meters (sqm) and supported 121 residential projects in several regions.
The developed lands included fully-developed 75 million sqm, under-development 48 million sqm, and 39 million sqm in circulation.
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Arab News
14 hours ago
- Arab News
Saudi bank credit races to $834bn in April as companies out-borrow households
RIYADH: Saudi banks' outstanding loan portfolio climbed to SR3.13 trillion ($833.7 billion) at the end of April, up 16.51 percent from a year earlier and marking the fastest annual expansion since mid-2021. According to figures from the Saudi Central Bank, also known as SAMA, the double-digit jump adds roughly SR443 billion in new credit over 12 months and underscores how the Kingdom's project-driven growth model is reshaping balance-sheet priorities across the banking system. Behind the headline figure is a striking pivot toward business customers. Corporate borrowing jumped 22 percent year on year to SR1.72 trillion, lifting its share of total credit above 55 percent, while loans to individuals rose a more measured 10.4 percent to about SR1.4 trillion. Real estate developers remain the largest borrowers, accounting for 21.77 percent of outstanding corporate credit. This division was followed by the wholesale and retail trade sector at 12.29 percent, utilities, including electricity, gas, and water, at 10.98 percent, and manufacturing, which is close behind at 10.9 percent. Within the fastest-growing niches, transport and storage finance soared 47.5 percent to SR67.6 billion, education credit expanded 44.8 percent to SR9.5 billion, real-estate borrowing increased nearly 39 percent, and loans to financial services and insurance firms jumped 35.1 percent to SR159.9 billion, according to SAMA. Vision 2030 projects drive demand Large national projects are driving most of the new business borrowing. Huge developments, such as NEOM, the Red Sea resort, Diriyah, and King Salman International Airport, require long-term bank loans to enable builders and suppliers to continue their operations. Newer industries, including green hydrogen plants and data centers, utilize short-term credit to cover their costs while they are being established. At the same time, home loan growth is slowing because many families took advantage of subsidized Sakani mortgages between 2021 and 2023. A March report by JLL says Saudi Arabia's non-oil economy should grow 5.8 percent in this year, up from 4.5 percent in 2024. JLL expects the real estate market to be worth about $101.6 billion by 2029, an average rise of 8 percent a year, and noted that Grade-A offices in Riyadh are almost fully occupied, pushing prime rents to $609 per sq. meter. Such conditions translate directly into bank-financed demand for land acquisition, infrastructure outlays and bridging loans for developers racing to deliver stock ahead of the FIFA World Cup 2030 and Expo 2030. Although real-estate developers still claim the largest slice of corporate credit, another borrower group is accelerating just as quickly: insurers. As the property boom feeds through to compulsory project coverage and fast-growing medical and motor lines, the insurance industry's need for cash and capital is rising sharply. According to KPMG's Saudi Arabia Insurance Overview 2025, sector revenue jumped 16.9 percent year on year in the third quarter of 2024 as compulsory medical cover, brisk motor sales, and a wave of big property projects swelled premium volumes and claims reserves. The same report flags heavy spending on 'technological innovation' as firms roll out IFRS-17 systems and digital sales platforms. Under SAMA's rulebook, however, ordinary loans or bond proceeds cannot be counted toward an insurer's solvency margin unless the central bank gives written approval, and only Basel-style Tier-2 subordinated instruments qualify as supplementary capital. Facing larger day-to-day cash needs, significant IT expenditures, and tighter capital buffers, alongside a regulator-driven wave of mergers that has already prompted players like Amana Cooperative and ACIG to explore tie-ups to gain scale, insurers are increasingly turning to banks for revolving credit lines and subordinated sukuk financing. The funding strain is now visible in the monetary statistics. Outstanding bank credit to 'financial and insurance activities,' registering one of the fastest growth rates of any sector, reflecting a mix of liquidity borrowings. The education sector is also borrowing heavily to meet Vision 2030 targets. April's EDGEx 2025 expo in Riyadh attracted over 20,000 delegates and showcased private-school growth plans that could lift the non-state share of enrolment from roughly 17 percent to 25 percent within five years. New digital platforms such as Madaris promise to streamline admissions and tuition payments, while PwC's purchase of Saudi consultancy Emkan underscores the sector's investment appeal. These dynamics help explain why bank lending to education providers is growing at more than four times the system average. Funding and liquidity Rapid corporate demand poses funding challenges. Fitch projects that Saudi bank lending will rise by 12 percent to 14 percent in 2025, again surpassing deposit growth and stretching a funding shortfall that had already reached roughly SR0.3 trillion in 2024. For now, liquidity remains comfortable. The loan-to-deposit ratio stands near 82.41 percent in April, and non-performing loans hover below 1.5 percent, according to SAMA data, thanks in part to stricter underwriting and the central bank's early-warning analytics. Interest rates' dual impact Contrary to conventional wisdom, elevated interest rates have not dampened corporate borrowing appetite. Several structural factors continue to shield large borrowers from the impact of rising rates. Project-finance deals tied to government-related entities in the Gulf are typically funded on long-term, availability-based contracts, with pricing linked to government benchmarks rather than floating interbank rates, limiting their direct exposure to movements in SAIBOR. Large corporates also employ interest-rate swaps and caps to lock in borrowing costs, according to local treasury advisory guidance, so higher policy rates do not translate one-for-one into higher debt-service outlays. Households, by contrast, feel the tightening much sooner. SAMA's updated disclosure rules require banks to display mortgage rates tied to the three-month SAIBOR, and most variable-rate home finance contracts reset against that benchmark every quarter. As SAIBOR followed the US Fed trajectory above 5 percent through 2024, monthly repayments for floating-rate mortgages rose accordingly, helping explain why retail-loan growth has cooled relative to corporate demand. Taken together, the mix of hedged or government-linked pricing on large projects and the immediate SAIBOR pass-through on household mortgages helps explain why elevated interest rates have slowed consumer borrowing more than business lending — without significantly curbing overall credit growth. The April numbers confirm a structural hand-off. After a decade in which subsidized mortgages dominated credit creation, business lending is now the engine of Saudi banking. That shift mirrors the broader diversification of the Kingdom's economy— away from oil, toward industry, logistics, tourism and technology. For lenders, the opportunity is immense, but so is the challenge of funding mega-projects without stretching balance sheet resilience. With capital ratios near 19 percent and a regulatory regime quick to adapt, Saudi banks appear well-placed to finance the next leg of Vision 2030's transformation while maintaining the stability that has long been the system's hallmark.
Arab News
5 days ago
- Arab News
Hong Kong-based Gaw Capital plans to step up Middle East investments
HONG KONG: Gaw Capital plans to bolster investments in the Middle East, its top executive said, as the Hong Kong-based multi-asset investment manager looks to tap into the post-COVID boom in the region's real estate and other industrial sectors. Christina Gaw, Gaw's managing principal and global head of capital markets, said the firm is looking at real estate and other businesses in the UAE and Saudi Arabia as their population has a large demand for real assets. Gaw acquired a residential building in Abu Dhabi in May for more than $150 million, and signed a pact in November with Expo City Dubai and Lingang Group to explore creating the Expo Life Science Park in Dubai. The firm, which had $34.4 billion of assets under management as of the end of 2024, expects to close another deal in the region in the second half of the year, said Gaw, whose two elder brothers founded the company in 2005. Gaw's interest in the Middle East comes against the backdrop of a post-pandemic property boom there, fueled by business demand and foreign investment. '(The Middle East) is very wealthy, what can you bring to them? It's the expertise ... they want to attract talents and different businesses,' Gaw said in an interview. 'And we have tenants and business who want to expand there, so we act as a bridge ... to provide them funding and local connections.' The firm plans to set up a separate vehicle to build an investment track record in the Middle East first before using its main funds in the future. Gaw, whose main focus has been Greater China and in recent years in Japan and Australia, is also raising a $2 billion fund for private equity and private credit opportunities in Asia Pacific. The fund is receiving interest from Middle Eastern and Asian investors, as well as in North America, who are looking to diversify amid changing geopolitics. 'Currently the US has many uncertainties. Investors who have been overweighting the US and have done well for many years now may say, 'I need a little level play',' Gaw said. 'Asia, on the other hand, has underperformed in the past five years, creating relative value, and people feel they need a repositioning and add some positions in Asia.' Besides the Middle East, Gaw this year also made investments including more than $1 billion in the Tokyu Plaza Ginza mall in Tokyo with a joint venture partner, and a 45 percent stake in Agility Asset Advisers, a real estate manager in Japan. In its home market, Gaw said that the firm was focusing on a private credit business linked to upper-middle class residential projects, and was in talks with developers with liquidity needs as well as banks that are selling their non-performing loans.
Arab News
30-05-2025
- Arab News
Naif Alrajhi Investment, Aljazira Capital launch SR1.7bn fund
Naif Alrajhi Investment has formed a strategic partnership with Aljazira Capital to launch a closed private real estate investment fund. Valued at SR1.7 billion ($453.2 million), the fund will focus on the development of two high-impact real estate projects in Riyadh and Jeddah. This partnership underscores the shared investment vision of both companies in the Saudi real estate market and their shared ambition to enhance its appeal by developing innovative, high-value projects. The fund will support the execution of two strategic developments in two of the Kingdom's most prominent and dynamic cities. In Riyadh, the fund will support the development of a luxury residential project in Al-Khuzama district, designed to offer a fully integrated residential environment. The project will feature a diverse range of private residences, premium services, and architectural designs aligned with Saudi Arabia's modern vision. Strategically located near key landmarks in the capital, the project offers strong investment value and serves as an ideal choice for those seeking exceptional living in one of Riyadh's most prestigious neighborhoods. In Jeddah, the fund will support a mixed-use development in North Jeddah along King Abdulaziz Road. The project will feature residential and commercial towers, a luxury hotel, office spaces, retail outlets, and dining destinations. Designed to meet the growing demand for integrated, lifestyle-centric developments, the project combines living, working, and leisure in one strategic location. Its architectural design reflects Saudi Arabia's vision to preserve and modernize the Kingdom's identity, contributing to the evolving urban landscape of Jeddah in a contemporary and forward-looking way. Naif Saleh Alrajhi, chairman and CEO of Naif Alrajhi Investment, said: 'We are proud to partner with Aljazira Capital in developing two high-impact projects. Strategic locations were carefully selected, and the real estate offerings were designed based on thorough market research and trends, while ensuring alignment with the urban code and architectural identity of each region.' He added: 'This collaboration reflects our ongoing commitment to developing distinctive real estate projects that enhance quality of life.' Naif Al-Mesned, CEO and managing director of Aljazira Capital, said: 'At Aljazira Capital, we remain dedicated to offering high-quality investment opportunities that align with our clients' aspirations and respond to evolving market demands. The launch of this fund, in partnership with Naif Alrajhi Investment as a specialized real estate developer, reflects our strategy to diversify our investment offerings and reinforce our active presence in the real estate sector.' Bandar Al-Hogail, head of real estate assets at Aljazira Capital, added: 'The launch of this fund marks an important milestone in Aljazira Capital's strategy to offer a diversified portfolio of high-quality real estate investment products.' He added: 'Partnering with experienced industry specialists such as Naif Alrajhi Investment — the developer behind the fund's projects — is a key factor in ensuring project success and achieving targeted returns.' Naif Alrajhi Investment is one of the Kingdom's leading investment groups, managing a diversified portfolio with a strong focus on the real estate sector. With a proven track record of success both locally and internationally, the company brings deep expertise and a strategic vision to developing real estate assets that meet the highest standards.
