Sheikh Abdullatif Al Shelash says he maintains a habit of keeping a worldview when it comes to tackling the real estate market.
Saudi Arabia’s housing sector is gearing up for a banner year in 2023. The capital city of Riyadh is on track to double its population and become one of the 10 biggest city economies in the world, according to arabnews.com. However, what Sheikh Abdullatif Al Shelash says makes the Saudi market so different is that it’s still in its beginning stages.
“If you learn about real estate sectors globally and how they start, they start as being [a] land trading business,” Abdullatif Al Shelash explains. “If you look at more developed countries, such as the U.S., such as Europe, right now, individual building of houses will be around 10%, 5%. Meanwhile, 90% is really corporate and institutional building.”
Al Shelash adds that in Saudi Arabia there is a shift in buyer behavior which is moving from buying land to buying houses.
This is all due to the legalization of mortgages in Saudi Arabia, which began in 2012. It’s something Abdullatif Al Shelash says is still in a premature state.
“Mortgage penetration in Saudi is less than 5%. Almost 95% of the houses in Saudi or the property in Saudi, commercially or residential, are unleveraged,” Sheikh Abdullatif Al Shelash says. “Therefore, they’re equity-based. If they’re equity-based, then they’re less volatile to fluctuations in the currency markets.”
Al Shelash shares that this equates to changes in the country’s income and the volatility of interest rates. He explains that Saudi real estate is essentially almost isolated from the economic system, thanks to it being equity-based.
Sheikh Abdullatif Al Shelash Shares Worldwide Real Estate Knowledge
In addition to being on the board of Saudi Home Loans, Sheikh Abdullatif Al Shelash is a partner in Alaqtar Real Estate Development Company, which he says is perpetually studying markets regionally and globally. Alaqtar is currently developing secondary cities in Saudi Arabia. The brand recently listed its latest land development plans, which include the acquisition of 1 million square meters of land in the Qassim region north of the city of Buraydah.
Alaqtar is already in the midst of developing Alaqtar Towers, which will be the tallest building in Buraydah and will be a mixed-use residential building with contemporary elements. Alaqtar.com reports the towers will consist of 2,000 housing units, and commercial spaces are planned to accommodate residential needs with 40,000 square meters of green spaces, government facilities, and mosques.
Abdullatif Al Shelash says globally, Alaqtar is hunting for possible land to develop in Europe, the U.S., and Asia to diversify its portfolio.
Bosnia Could Be Next Major Real Estate Deal To Seal
Abdullatif Al Shelash says he’s been looking at property markets in Sarajevo, Bosnia-Herzegovina, and says he sees it as a tremendous European investment opportunity within the next four to five years.
“When you invest in real estate, your look horizon should take more of a medium-term, long-term view on things. Property prices that we have purchased over there, they were very attractive, they have appreciated since we purchased them in a tremendous way, and I think it was a very good call for us to really do that,” Abdullatif Al Shelash says.
According to balkaninsight.com, real estate prices in Bosnia-Herzegovina are already experiencing an uptick and major developers are moving in on the territory. Bosnia-Herzegovina house prices jumped 2.3% year over year in December 2021.
What Are Some of the Greatest Challenges Currently Facing Saudi Real Estate?
Despite his global endeavors, Sheikh Abdullatif Al Shelash confides he’s also focusing on Saudi real estate, especially since securing loans in the Kingdom of Saudi Arabia is becoming less of a hassle. He says Saudi Home Loans has taken the guesswork out of the process and the mortgage industry there has no way to go but to grow.
“Our consumers need 10 choices of mortgages, not only one choice of mortgages,” Abdullatif Al Shelash says.
Founded in 2007, Saudi Home Loans has been on the ground floor of the mortgage industry in Saudi Arabia. Offering products and services that are entirely Shariah-compliant, it’s no surprise that the company was voted Best Real Estate Finance Company in Saudi Arabia at the Arabian Enterprise Awards. Mortgage lending terms have also become more favorable for consumers in recent days.
The Saudi Real Estate Refinance Company, which is comparable to Fannie Mae in the United States, is extending the longest term borrowers can get on mortgages from 25 years to 30 years.
There are also plans to make Riyadh one of the planet’s top 10 city economies, according to arabnews.com. Although Riyadh is currently in the No. 40 spot on the global economic scale, Saudi leaders are targeting Riyadh’s population to grow from 7.5 million to 15 million to 20 million within the next eight years.
There’s an investment initiative to boost Saudi Arabia in terms of innovation, employment, education, services, and beyond. The development of the futuristic, zero-emissions city, The Line, is also drawing curiosity and possible investors from around the world.
“I think Saudi could be the place of a new renaissance for the future,” said Matteo Renzi, an Italian senator and former prime minister, in a video on arabnews.com.
