The Saudi Real Estate Refinancing Company (SRC), a subsidiary of the Public Investment Fund established in 2017, has made a significant impact on Saudi Arabia’s housing finance market by injecting over SR50 billion (approximately $13 billion). This influx is intended to rejuvenate the nation’s real estate sector and contribute to achieving the ambitious target of 70% home ownership set by the Kingdom’s Vision 2030.
Revolutionizing Housing Finance
SRC’s strategy to transform the housing finance landscape has been efficient, focusing on providing funds to originators and financial institutions. Over the span of two years, SRC has backed nine residential finance entities with 30 refinancing transactions totaling more than SR5.6 billion. Continuing this trend from 2021 to 2023, the company supported the secondary market with 54 refinancing operations amounting to SR29 billion, involving 16 different institutions. SRC’s model of offering standard refinancing solutions has been pivotal to its success, irrespective of fluctuating lender interest.
Fueling Market Stability and Innovation
The contributions of SRC extend to fostering market stability and spurring innovation. The company has introduced a slew of initiatives including credit hedging, balance sheet solutions, and funding mechanisms that enhance capacity and liquidity. These initiatives have been instrumental in cultivating a stronger, more dynamic real estate financing environment.
Expanding Sukuk Program
In alignment with Saudi Arabia’s Vision 2030 Financial Sector Development Program and its housing objectives, SRC has ambitiously expanded its sukuk program to SR20 billion. This move reinforces its role as a regular issuer in the financial market. SRC’s history includes issuing sukuk valued at SR750 million and enhancing its domestic sukuk program with state-backed guarantees to SR10 billion, offering various maturity options.
The future for SRC includes diversifying its funding sources through dollar-denominated bonds and mortgage-backed securities. This strategic direction is aimed at drawing international investments and infusing additional liquidity crucial for the sustained growth of the real estate financing sector.