Saudi Arabian banks have observed a significant rise in lending, with total loans reaching SR2.67 trillion (approximately $711.5 billion) in March, reflecting an 11 percent year-on-year growth, based on the latest figures from the nation’s central bank.
Analysis of the data disclosed by the Saudi Central Bank (SAMA) indicates that 35 percent of the loan expansion was driven by personal borrowing, while a substantial 65 percent was allocated to businesses, notably fueling real estate transactions and utilities such as electricity, gas, and water services. Corporate real estate financing, in particular, saw a remarkable 27 percent annual increase in March, the steepest in ten months, amounting to SR275.2 billion.
A report by Mortor Intelligence using 2023 as a reference year values the Saudi real estate market at $69.51 billion in 2024 and predicts an ascent to $101.62 billion by 2029, growing at a compound annual growth rate of 8 percent over the five-year period. This upswing in construction and property development is likely heightening the demand for loan financing, predominantly provided by Saudi banks.
March’s statistics also highlight a surge in new retail residential mortgage loans, which hit a 14-month peak at SR7.63 billion. This signifies a 5 percent increase from March of the previous year and a 10 percent jump from the previous month.
- New retail residential mortgage loans escalated, touching a 14-month zenith at SR7.63 billion in March.
- Financing for professional, scientific, and technical activities leaped by 54 percent, soaring to SR6.4 billion.
The lion’s share of March mortgage lending was for home acquisitions, representing 64 percent of the new individual mortgages at SR4.91 billion. Apartment loans witnessed a sharp 28 percent growth, totaling SR2.24 billion, whereas land loan increases were more subdued at 4 percent, reaching SR474 million in fresh mortgages.
Such vigorous loan activity can be attributed to the influx of expatriates seeking residence and government-led financial modernization efforts. A study by Knight Frank found a marked preference among expats for apartments over villas, particularly among those in the 35-55 age bracket.
Secondary to real estate, the utilities sector saw a 27 percent annual boost in corporate loans, hitting SR147.42 billion in March. Reports pinpoint the residential sector as the predominant consumer in the Saudi power market for 2023.
Additional sectors experiencing remarkable loan growth include professional, scientific, and technical activities, which surged by 54 percent to SR6.4 billion. Education sector loans also saw significant growth, with a 28 percent year-on-year increase to SR6.27 billion, while loans for administrative and support service activities rose by 20 percent to around SR34.22 billion.