Interview with Majeed Fahad Alabduljabbar, CEO of Saudi Real Estate Refinance Company – SRC

14 May Interview with Majeed Fahad Alabduljabbar, CEO of Saudi Real Estate Refinance Company – SRC

How is the growth momentum of recent years, thanks to Vision 2030 impacting the real estate and refinance industries in Saudi Arabia?

Before the launch of Vision 2030, Saudi Arabia’s real estate financing framework lacked essential components. The strategic Vision 2030 initiative identified regulatory gaps that the government has resolved by filling the gaps within the full mortgage finance and refinance cycles including the creation of  a guarantee company to support lower-income households in accessing financing and SRC to develop a viable secondery mortgage market. In this landscape, the Saudi Real Estate Refinance Company (SRC) emerged as a pivotal player, that links capital market liquidity to the primary market originators which allows the cycle of mortgage finance and refinance to take place. Since its inception in 2017, SRC has facilitated SAR 50 billion in refinancing, including short-term facilities, thereby improving financing terms for consumers. Beyond providing liquidity and refinancing solutions to banks and real estate finance companies, SRC offers risk management solutions, that transfer risk from the banking sector to capital markets. Looking ahead, SRC is poised to expand internationally, tapping into capital markets beyond Saudi Arabia. Since 2018, the real estate finance sector within Saudi Arabia has witnessed exponential growth, reaching over SAR 700 billion in home financing within the country to date.

What role do you see the giga projects like Red Sea, ROSHN, NEOM and others play attracting investment in the Saudi real estate market?

Although we are not directly engaged with the giga projects, we recognize their potential as a lucrative market for future engagement. The success of these ambitious ventures, such as the Red Sea, ROSHN, NEOM and others, , mirroring the trajectory seen in Singapore, Dubai and other global destinations. We expect that will be great global interest in these projects due to both the scale of these projects and the geographic location of the Kingdon from a global perspective. SRC is  ready to faciltate and support their growth through refinancing initiatives if required.

You have recently signed a deal with Alrajhi Bank for $1.6 billion of real estate refinancing. Could you walk us through the details of this deal?

As an entity under the Public Investment Fund (PIF), our operations are distinct and independent from ROSHN and its subsidiaries. Our recent transaction with Alrajhi Bank , underscores our significant role in the mortgage refinance sector. This partnership is a testament to the growing recognition and endorsement of our refinancing efforts in the market. While we have collaborated with other major banks across Saudi Arabia, our most substantial agreement to date is with Alrajhi, totaling over SAR 11 billion. This collaboration not only reflects the growth of the banking sector, but also highlights the potential for further partnerships, especially in light of significant undertakings such as the giga projects. Anticipating these developments, we foresee continued and expanded collaboration with Alrajhi and other banks to support their growth goals effectively.

How are you working alongside private sector partners to achieve your goals and what partnerships are you targeting in the future?

SRC, a private sector company owned by the PIF, supports the housing and financial development programs, two major pillars in the vision 2030. Our primary mission within the private sector is to provide support to banks and real estate finance companies. Our key focus is on standardizing and growing the housing mortgage market, in conjunction with the implementing regulations issued by Saudi Central Bank (SAMA).  SRC is working with our partners in harmonizing procedures and ensuring uniformity, thus facilitating a more streamlined and efficient refinancing process. This standardization not only simplifies the refinancing process, but also enhances speed and accessibility, eliminating the need for individualized assessments for each customer.

In terms of collaboration and future partnerships, our approach is geared towards working closely with private sector partners to enhance the overall efficiency and effectiveness of the housing finance ecosystem. Through these strategic alliances, we aim to further our objectives and contribute to the broader goals of housing and financial sector development, ensuring that our efforts align with and support the vision and regulatory framework established by SAMA.

MISA continues to report a strong influx of foreign investment, thanks to favorable credit ratings and reforms that strengthen investments. Amid international uncertainty, how globally competitive do you see the Saudi market for major investments by foreign finance sources?

The real estate sector in Saudi Arabia, especially with the advent of giga project, faces strong competition and expects significant growth leading up to 2030, drawing considerable investor attention. Regulatory reforms by the Ministry of Justice, MOMRA, ZATCA and Capital Markets Authority are designed to synchronize regulations with development ambitions, enhancing the market’s attractiveness to investors. Traditionally we have depended on domestic financing, we’re now exploring international financing avenues to present the success story  of the housing ecosystem to a global audience. Our housing market stands out due to its stability and exceptionally low rate of non-performing loans (less than 0.5%), which we expct to spark significant international investor interest. This positions Saudi Arabia uniquely in the MENA region, which is relatively untapped in terms of comparable market potential and growth opportunities. International investors are expressing keen interest and are excited about potential investments in our market, reflecting the global competitiveness of the Saudi market for substantial foreign investments amid international uncertainties.

As a CEO of an entity that plays a key role in the Saudi transformation story, what is your strategic vision for the medium-term and what are the main priorities you and your team are targeting?

My strategic vision aligns with Vision 2030’s goal of achieving 70% home ownership. This involves a collaborative effort with government entities to ensure market regulation and support financiers in overcoming obstacles to reach the 70% target. On an internal level, our focus is on attracting international investments and innovating our product offerings, including securitization, while staying adaptable to regulatory shifts and nurturing local talent.

What is your final message to the readers of Foreign Policy about choosing Saudi Arabia as their next business and investment destination?

Come visit Saudi Arabia and see the change.