The Housing program Delivery plan
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The Housing program
Delivery plan
In the Name of Allah, the Most Gracious, the Most Merciful
Contents
CONTENT Chapter 1| Scope of the Vision Realization Program A. Overview of the Housing Program 7 B. Level 3 objectives directly linked to program 7 C. Level 3 objectives indirectly linked to program 7 Chapter 2| Aspirations A. Our Commitment by 2020 11 B. Vision Realization Program indicators 11 First: Macroeconomic indicators 11 Second: Program indicators 11 Chapter 3| Current Situation First: Main challenges 15 1. Overview of sector challenges 16 2. The gap between supply and demand (cumulative demand) 17 Second: Current transformational efforts 17 1. Efforts led by Ministry of Housing 17 2. Efforts outside Ministry of Housing 18
Chapter 4| Vision Realization Program Strategy A. Strategic pillars 21 1. General strategy 22 2. Strategy and transformation of sector 23 3. Communications approach 24 4. A. Analysis of land availability, location and infrastructure readiness 30 4. B. Analysis of urban housing prices 30 4. C. Implementation plan 31 4. D. Governance: general and city levels 32 B. Strategic considerations 36 C. Conflicts and interdependencies with other programs 38 Chapter 5| Initiatives and Timelines A. Portfolio 40 D. Game changing initiatives 64 E. Classification methodology 66 Chapter 6| Enablers E. Contribution to local content 68
Chapter 1| Scope of the Vision Realization Program
Vision Realization Program Scope
This chapter aims to give an overview of the Housing Program, define its scope and outline direct and indirect
relations to the level 3 Vision objectives approved in its charter.
A. Description
The Housing Program aims to offer solutions to enable Saudi households to own or benefit from housing
according to their needs and finances. This will improve living conditions for current and future generations,
increase the supply of affordable housing units in record time, and enhance access to subsidized and
appropriate funding. Integral to the Housing Programs are specialist programs targeting the most deprived
sectors of society, and the further development of the legislative and regulatory environment,. These measures
are designed to increase the housing sector’s attractiveness to the private sector, develop local content,
create more business opportunities and strengthen the economic foundations of the Kingdom.
Program scope: increasing supply, enabling demand and regulating the sector
1. Increase supply of suitable homes pathways including:
• Regulate population density and redevelop city centres to reduce the land required.
• Provide suitable plots and exchange land with government for establishment of new housing projects.
• Construct housing units in record time by incentivizing the real estate development sector to employ
advanced building and construction technologies and develop the sector’s capabilities.
• Public Private Partnership (PPP) programs.
2. Enable beneficiaries to acquire appropriate housing through including:
• Serve segments that need cooperative initiatives for free housing as usufruct right.
• Activate institutional housing programs to cover the needs of beneficiaries working in the public sector.
• Provide financing for the various segments through transforming the Real Estate Development Fund
into a financial organization and establish the Saudi Real Estate Refinance Company (SRC).
3. Regulating the Housing Sector through several pathways including, for example:
• Regulate the real estate development environment through the enablement and regulation of off-plan sale.
• Regulate the relationship between the owners and residents of the housing units under joint ownership.
• Reduce the time to acquire real estate development permits through the activation of Developers
Services Centre (Etmam).
Beyond the scope of the Housing Program
Usually the Program does not directly construct or fund housing units and complexes. These are generally
private sector activity.
B. Level 3 objectives – direct
2.6.2 Enabling Saudi households to own suitable housing.
C. Level 3 objectives – indirect
1.3.1 Reinforce national values and the sense of belonging.
2.3.2 Improve the urban landscape.
2.6.1 Support householders as they plan for their children’s future.
2.6.4 Enable citizens through the social care system.
2.6.5 Improve the efficiency and effectiveness of the social welfare system.
3.3.2 Develop the digital economy.
3.3.7 Increase the percentage of Saudization in non-oil sectors.
6.1.1 Support and enable financial planning.
7Chapter 2| Aspirations
Vision Realization Program Aspirations
1. The Program aims to improve the housing sector through five axes:
Easy access to suitable housing
through technical solutions
offering transparency and
reliability
Beneficiaries
Incentivise the private sector to Strengthen sector regulation
offer affordable housing Housing Sector and awareness to increase
finance packages to private Funding Sector attractiveness to investors and
Environment
citizens confidence of beneficiaries
Developers NGOs
Increase the number of Effective participation of NGOs,
developers to increase housing individuals and institutions
options and quality contributing to financing projects
for lower income households
9This will have a positive impact on two levels:
Macroeconomic level
Contribute to increasing local content in housing sector to 63.5% by 2020.
Housing Program level
• Increase Saudi household home ownership rates to 60% by 2020.
• Boost real estate funding by increasing total mortgages to SAR502 billion by 2020.
• Increase affordability by reducing the ratio between the average residential unit price to the
annual income per capita by factor of five.
2. Benchmark study: home ownership rates
After benchmarking against several advanced economies, it was concluded that there is no
common home ownership rate in any economies, rather they demonstrate a range of ownership patterns.
• Low-medium : 40-50 %.
• Medium-high: 60-70 %.
• High: %90.
Ownership rates rely on several factors including social desires and people’s choices,
and economic factors such as the labour market, urbanization etc.
This benchmarking exercise study was followed by an analysis of Saudi Arabia, demonstrated:
• The current rate of home ownership (concrete) is estimated at %50, home
ownership (non-concrete) at %13, and rental %37.
• The strong preference for home ownership is clear from previous surveys.
It was further boosted by the Real Estate Development Fund’s SAR250 billion
investment to build approximately 480,000 new homes.
• A key aim of Vision 2030 is to create suitable job opportunities
for Saudi Arabia’s young and dynamic population. The labor force of tomorrow
will need to be mobile and flexible – which has significant implications for the housing sector.
3. Housing Program target ownership rates
• Achieve %60 ownership by 2020, reducing pressure on housing stock.
• Provide rental, subsidy and usufruct solutions to less affluent households.
10A. Our Commitment by 2020
In order to achieve the aspirations of Vision 2030,
this Program shall be committed to achieving a number of successes on
various attributes related to macroeconomics and program objectives by 2020.
This will constitute a main founding block in achieving the 2030 aspirations
on two levels, detailed as follows:
B. Vision Realization Program Indicators and Objectives
First: Vision Realization Program’s contribution to macroeconomic indicators
The Program team, in cooperation with concerned bodies, defined the amount
of Program contribution to the macroeconomic indicators of the Kingdom of Saudi
Arabia as detailed below:
Macroeconomic level:
Increase local content in the housing sector to 63.5% by 2020.
Program level:
Increase Saudi home rate to 60% by 2020.
Increase housing affordability by reducing average residential unit prices
to five times the average annual income.
Benefit from real estate funding opportunities by increasing
total outstanding mortgages to SAR502 billion by 2020.
Performance indicator 2020 targets
Program contribution to Gross Domestic Product (non-oil GDP) Target: SAR73.9 billion in 2020,
Based on the number of added units and depending cumulative target SAR155.7 billion.
on the Ministry of Economy and Planning Baseline: SAR8.8 billion for 2017.
(Center for Strategic Development) model
Performance indicator 2020 targets
Non-oil Revenue (NOR)
Target: SAR7.4 billion
Collection of projected revenues from initiatives with projected Baseline: SAR0.01 billion in 2017.
revenue.
11Performance indicator 2020 targets
Employment in the private sector (cumulative) 37,000 direct jobs
The most important aspects of direct employment are services 71,000 indirect jobs
and manufacturing with building technology. 361,000 construction jobs
Expected contribution: 469,000 jobs.
Performance indicator 2020 targets
Contribution to local content
Assumed effect of modern housing and building technologies
Target: 63.5%
on the housing sector value chain .
Baseline: 54.1% in 2017.
Contribution to local content calculated using
local content growth unit.
Performance indicator 2020 targets
Impact on inflation Target: 0.06%
Based on Housing Program inputs and Ministry of Economy Baseline: 0.04% for 2017.
and Planning model
Performance indicator 2020 targets
Target: SAR187.7 billion.
Non-governmental investment (cumulative) Baseline: SAR5.4 billion
in 2017.
Performance indicator 2020 targets
Consumption growth rate
Based on Housing Program inputs and Ministry of Economy Target: 0.01%
and Planning model Baseline: 0.17% for 2017.
Performance indicator 2020 targets
Balance of payments (cumulative)
Expected total remittances resulting from Housing Program Target: (-) SAR85.8 billion
comprised of Baseline: (-) SAR7.6 billion.
1/ Cash left 2/ Imports 3/ Remittances
12Second: Program indicators (including game changing initiative indicators):
Indicators measuring and directing the Housing Program reflect Vision 2030priorities
Performance indicator 2020 targets
Saudi home ownership rate Target: 60%.
Calculated by dividing the number of Saudi owned
homes by the total number of Saudi households. Baseline: 50% in 2016.
Average residential unit price to average annual income
per capita (affordability) Target: 5x.
Average residential unit price (apartment or villa)
to average annual income per capita Baseline: 9.9x in 2015.
Total outstanding real estate loans (mortgages) Target: SAR502 billion.
Adding outstanding mortgages from Housing Program to
outstanding mortgages from banks, financing companies Baseline: SAR290 billion in 2017.
and the Real Estate Development Fund.
Beneficiary satisfaction rate
Target: 70%.
Measures satisfaction of housing program beneficiaries,
including quality of units and funding provided, ease
of procedures, level of transparency, and beneficiary services Baseline: 43% in 2017.
Real estate sector strength Index
Indicates strength of real estate sector based on internal
and global indicators (ease of doing business) including Target: 85%
availability of sector information and indicators,
ratio of important legislation in force, indicators Baseline: 43.8% in 2017.
of property registration and access to credit,
and contract enforcement
Real estate sector growth rate Target: 7%.
Measures growth in ownership of dwellings in comparison
with the previous year. Baseline: 3.63% in 2017.
13Chapter 3 | Current Situation
15
1. Sector challenges
2. The housing sector is facing challenges relating to all stakeholder groups :
Approvals and Planning Infrastructure Land Liquidity Execution and reserving
permits Limited liquidity and Activating real estate
related restrictions mortgage regulations
Uncoordinated Outdated Burden of Unsuitability of
approvals regulations of area delivering available land
processes division and density infrastructure to
units Developer Citizen Financer
(housing builders)
7 6 5 4
Suitable homes Subsidised finance 13 12
13 22 3 1
11 10 9 8
15 14
Contact and Land Data
Operation and Sector structure Building and Tenders citizen journey register transparency
maintenance construction
Products portfolio Risks
Disorganized Limited capabilities Poor productivity Ineffective contracts
and business Products not Absence of
utility sector and reliance on small
contractors frameworks for matching guarantees
partnerships (PPP) Third Sector (non profit) Government Sector
(policy maker)
Economic policy
24
24 23
23 22
22
22 21
21 1717 16 Spatial planning
Legislations 24 Housing donation Housing and
Horizontal expansion
Legislation inadequate for Absence of employment
needs of cooperative housing, channels and misalignment
underprivileged sector regulation
development efforts
General risks Social policy
Risk of a real estate 20 19 18 Slums and communities
Planning and execution Identifying needy beneficiaries funding crisis of similar nature which
Product development and Beneficiaries data not audited, absence of a limits integration
unit preparation specific criteria to determine eligibility, Financial sustainability
and some beneficiaries defrauding the
Subsidisation burden
system
162. Demand and supply gap in major cities
Cumulative demand for housing reached 1.45 million across Saudi Arabia (ref Eskan Portal
and Real Estate Development Fund) with a significant increase in demand in several cities.
The Eskan Portal lists the 10 cities with most pressing demand for housing, accounting for
60% of the target for 2020. The remaining 40% target accounts for the supply gap in the
remainder of the country.
Demand scale for housing 300,000 new usufruct units are needed for socially deprived sectors
according to the Ministry of Housing and Ministry of Labour and Social
Affairs
Lower Higher
Medina
Demand: 106,000 units
Al-Qassim
Mecca Demand: 79,000 units
Demand: 281,000 units
Asir Riyadh
Demand: 191,000 units Demand: 325,000 units
Jizan Eastern Province
Demand: 79,000 units Demand: 242,000 units
17Current transformational initiatives
As a starting point for the new Housing Program, all ongoing development initiatives were assessed.
These fall into two categories:
• Ministry of Housing initiatives
• Efforts outside the Ministry
Ministry of Housing initiatives
The Ministry is leading a number of initiatives across the entire value chain, the most important of which are :
ETMAM
• Projects with a total area exceeding 44 million m2 approved.
• Permits enabling developers to better manage projects
and meet financial obligations expedited .
Idle Lands Fees
Wafi
• 40% of lands in major cities. • SAR50 billion ongoing projects.
• Utilize undeveloped plots that already • Reduce capital cost to motivate developers.
have infrastructure.
• Protect consumers from developer insolvency.
Mullak Union Partnerships Model (Sakani)
• More than 540 residential and commercial • 30-40 new developers under the MoH programs.
associations established. • Budget units provided in an innovative way wit
• Citizens encouraged to buy units. respect to options.
• Raise the market value of property. • Provide comprehensive residential communities
• Increase the efficiency of the utilities sector. offering a better lifestyle.
• 120,000 units and 75,000 plots in 2017.
Ejar
Ejar Third Sector & Developmental
Housing
• Register approx. 4000 real estate brokers. • Enhance non-profit sector’s role in low income housing.
• Facilitate monthly payments. • Develop and implement usufruct legislation.
• Provide comprehensive insurance for units. • Develop an electronic crowdfunding platform.
• Protect parties and resolve real estate disputes.
Contribution to demand Operational solutions Regulation and lowering cost and risk
182. Non-Ministry initiatives
Several initiatives from outside the Ministry are worthy of mention including:
Saudi Real Estate Refinance Company
Liquidity support through securitization of loan portfolios to international investors
Deepen the financial sector through the issue of local bonds.
Address incompatibility between long
Term interest rates to assist beneficiaries.
Saudi Arabian Monetary Authority Real Estate Development Fund
More flexibility in lowering the first instalment (from A business model that depends on investing the Fund
30% to 15%). resources and improve the efficiency
. of spending to
Monetary policies to increase market liquidity support more citizens.
(decrease risks of real estate guarantees from %100 to Support the real estate finance sector through
%75 and work on increasing the rate of reduction). cooperation with banking sector and real estate
Direct coordination between SAMA and Ministry of financing companies, and support industry to move
Housing to facilitate the issue of new financial from episodic achievements to better quality products
products. more attractive to investment.
Provide technical and engineering support to maintain
commitment and development for the sustainability of
invested assets.
Launch Real Estate Loan Guarantee Program in Q4
2017, open up finance opportunities to previously
excluded sectors of society
19Chapter 4 | Strategy
Strategy
This chapter summarises The Housing Program’s strategy, detailing all program aspirations
and commitments. It addresses strategy, strategic considerations and potential contradictions
at Program level.
A. Strategy pillars
The Program is dependent on various strategic inputs:
• Detailed analysis of data of approximately 1.45 million beneficiaries from the Ministry of Housing
and Real Estate Development Fund.
• Public opinion gathered at extensive series of public seminars and meetings organized in cooperation
with King Abdulaziz Centre for National Dialogue.
• Feedback from stakeholder workshops held with 500 representatives from 48 public, private and
financial sector organizations.
• Data from global benchmarking and expert inputs, illustrate alternative housing strategies followed
elsewhere in the world:
• Singapore: a preference for structured residential communities with high governmental involvement.
• Brazil: priority given to building an identity that reflects people’s wants and needs, with proactive
community involvement.
• Malaysia: reliant on success of national refinance company Kagamas in facilitating market liquidity.
• Turkey: priority is rehabilitating city centres in private-public sector collaboration.
• Mexico: priorities are the provision of adequate health, social and education services, and the
implementation of a successful savings and loan guarantee program.
• USA: priority given to verifying financial solvency and the repayment ability of borrowers.
Research from these various sources has helped inform
the Housing Program along four strategic axes:
• General strategy.
• Strategy and sector transformation.
• Communications and awareness.
• Implementation and governance.
211. General strategy
How the Housing Program serves the public and enhances the sector
Providing housing solutions that enable Saudi Households
to own or benefit from housing according to their needs and finances,
and to improve the housing sector for present and future generations.
Defining housing policy in alignment with other national programs
Housing policies
Beneficiaries management and waiting lists (eg developmental category, bankable
Employment, urban planning (spatial), lifestyle, financial balance
category, special categories and others)
Access to funding Development of suitable housing at affordable prices
Creating communities and
Increased access to funding Benefiting from lands and units at Developing supply side capabilities
Reducing funding cost providing comprehensive
appropriate sites
services
Strategic pillars • Funding guarantee • Subsidised funding, first instalment • Public sector lands and redevelopment • Modern building techniques • Management of housing
guarantee complexes and utilities
program
• Other real estate financial products (eg • Privatesector lands • Partnership models with private
funding: self building, off plan sale sector
• Non - sustainable housing units • Leading local companies • Community services
• Refinance • NGO participation
Operational improvement
Land division or comprehensive planning Connection of infrastructure to housing units Licensing and approvals
Enablers
Beneficiary journey and experience Communication and media Contracting and tendering frameworks
Strengthening the basis of the real estate sector
Sector foundations
Sector laws and legislations (eg real estate finance, Land registry Data transparency and availability of indicators
off - plan sale)
Implementation Program governance
222. Strategy and sector transformation
The housing strategy contributes to addressing the main challenges of the sector by:
Currently Objective
Increase availability of private sector funding
Reliance on slow government funding. options backed up by guarantee
and support system.
Active participation of non-profits in access
Limited role for non-profit sector – programs for low income groups.
including cooperative housing associations Establishment of cooperative social housing
– in the Saudi housing market. programs to increase supply.
Increase middle and low income housing stock
Limited availability of middle and low
according to modern construction techniques
income housing units.
and optimally manage current units in the market.
Housing plans incompatible with other Develop medium density communities with a full
development plans (eg employment, lifestyle approach (work, accommodation, retail,
urban planning etc). entertainment and education).
Limited contribution to basic economic
Grow economic contribution of housing sector,
fundamentals (eg GDP, jobs creation,
in accordance with Vision2030 aspirations.
localization of content etc).
23Increased access to finance
A key pillar of the strategy is to improve access to funding. Consumers are subdivided by
income level in order to design appropriate financial products, a key driver of demand.
Total beneficiaries
( Eskan Portal and Real Estate Development Fund)
Bankable middle to higher
1 income with acceptable 15%
obligations
Quasi-bankable middle to
2 higher Income with high 32%
obligations
Non-bankable low to
3 middle income with 38%
very high obligations
4 Low income 10%
5 Special categories (eg
widows, orphans, 60+,)
5%
1 2 3 4 5
Bankable Quasi- Non- Low Special
bankable bankable income categories
Enabling • Subsidized • Funding • Restoration / • Usufruct right • Usufruct
demand interest package Renovation • Restoration right
• Guarantees for (guarantee of Loans loan • Rental
specific advance • Rental and • Renovation subsidy
segment payment, rent-to-own Loan
financial support • Rental
guarantees, • Funding subsidy
interest package 1
subsidy)
Facilitating • PPP • PPP • Existing • Social • Developmental
supply • Self • Self housing stock housing housing
Construction Construction • Low cost units • Rental units • Real estate
• Ready Units • Existing 1 from Market Development
from market housing stock Fund rental
units
24A plan was developed for the delivery of funding products and unit types over the coming
years for the different categories served:
Delivered: 2017 2018 2019 2020 Served categories
Partnerships and off plan Bankable
building Quasi-bankable
Bankable
Self build Quasi-bankable
Bankable
Existing housing stock Quasi-bankable
Social housing Social housing
(usufruct units)
Non-bankable
Restoration loans Social housing
Rental and rent-to-own Non-bankable
subsidy Social housing
25The Program includes the following finance solutions organized according to income category
1/ Bankable 2/ Quasi-bankable
Able to obtain funding without state support Requires support or financial guarantees
with high ability to pay (eg high income, (eg middle income with high obligations).
acceptable or low obligations).
Guarantees to improve risk level in guarantee Guarantees to improve financial solvency
portfolio of applicants with respect to Saudi banks
and financial institutions.
263/ Non-bankable 4 & 5/ Low income and Special categories
Unable to obtain bank funding due to low Low income households, including social
financial solvency (ie low income with high security beneficiaries.
obligations).
Increase supply from existing housing stock Increase supply of available housing by
by subsidised rent and home restoration loans. rent subsidies, home restoration loans and the
supply of usufruct units.
27Case study: meet Faisal who takes us through the quasi-bankable roadmap
Faisal
43 year-old Faisal rents a home
for his family of five.
With a monthly salary of
SAR10,000 he’s now on the
road to home-ownership.
Solution 4: Sale of off-plan units
(Wafi) in public-private sector
partnerships up to SAR500,000
Solution 3: Subsidized interest
Solution 1: Real Estate
Solution 2: Reducing the up to SAR500,000
Financial Guarantee
first payment to %15
program enables Faisal to
obtain funding.
Instalment
Monthly equivalent
%30
Mortgage
15%
Instalments
Monthly equivalent
Bank
balance
Obstacle 4: Most units out
Credit of Faisal’s price range
rating Obstacle 3: High interest
rates on monthly
instalments
Obstacle 2: No savings to
cover ٪۳۰ first instalment
Obstacle 1: Faisal not
classified credit worthy
Faisal’s situation is similar to %32 of all
applicants
28Communications and awareness
A key pillar of the strategy is the design and implementation of a comprehensive
communications campaign with all our stakeholder groups – most importantly
with enables Faisal to obtain funding
Strategic communications
• Expectations Management.
• Overview of the current situation.
• Overview of state interaction to design and implement housing sector solutions.
• Stress governmental support of the Housing Program
• Clear and transparent management of customer expectations.
• Coordinated messages about ownership paths.
Product level communications
• Transparency regarding the entitlement of all beneficiaries.
• Personalized experience, (eg addressing specific consumer needs).
• Personalized customer messages addressing specific obstacles to service.
• Migrate from system of allocating housing to a system of managed customer-selection.
• Full transparency about beneficiary entitlements and delivery timetable.
4. Implementation plan and governance:
A clear methodology for supply and demand planning was identified through:
• Analysis of land availability, location and infrastructure readiness.
• Analysis of urban housing prices.
• Development of comprehensive implementation plan.
• Preliminary governance structure developed (City-level governance).
294 A. Analysis of land availability, location and infrastructure readiness
By means of a detailed analysis of available and idle urban land and infrastructure
readiness – conducted in collaboration with municipalities and utility providers –
the Program aims to increase land-use efficiency by more accurately matching
supply against demand and prioritising key support services.
4 B. Analysis of urban housing prices
After identifying cities with appropriate land and infrastructure available, acceptable
unit prices are calculated in consultation with developers based on official data eg
from Ministry of Justice.
(Saudi Riyal)
Under 1000
From 2000 : 1000
From 3000 : 2001
From 4000 : 3001
More than 4000
Not priced sectors
Proposed geographical scope
Percentage scope of priced areas
out of total area of proposed scope
Total Areas of Priced Scopes Categories
(Saudi Riyal)
More than ٤۰۰۰
From ٤۰۰۰ : ۳۰۰۱
From ۳۰۰۰ : ۲۰۰۱
From ۲۰۰۰ : ۱۰۰۰
Less than ۱۰۰۰
Study of Riyadh land price by
district
304. C. Implementation plan
2017 2018 2019 ۲۰۲۰
Activity Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
Planning phase Budget Approve budget
Program
Launch
launch Approve program
plan
execution
Coordinating focused
Priority
cities Launch focused execution Facilitating focused execution and solving- city specific issues
Continued
program housing
City level
execution
Other
cities Enabling elements (eg Execution across remaining cities and other areas (ongoing Ministry of Housing and other cooperative initiatives
infrastructure etc).
Central Housing Monitoring Center, national company for
Initiatives Monitoring and adjusting
Game
changer Implementing a central platform (eg self construction Development and operations
Initiatives platforms or platforms for a personal journey and others Launch all pivotal initiatives
Central
execution Monitoring
and control
Activating main committees, managing performance and solving execution problems
Communica
tions
Communicating and interacting with consumers and other stakeholder groups
Follow
up and Reporting, matching and continuous escalation of Directive and Strategic Committees
reports
31Governance
Strategic Office Strategic Committee
Steering Committee
(16 members)
Housing Program Office
Budget Committee
Planning and Follow- up
Committee Intensive Care Teams
Funding and Financial Control
Committee
32Governance structure: the Program Office
Strategic Office Strategic Committee
Steering Committee
(16 entities)
Real Estate
Ministry of Ministry of
Entities Development Entity 4
Housing Finance
Fund
Initiatives
Ministry of Housing Real Estate
Program Office VRO Development Fund
Ministry of Finance Entity 4
PMO
(Vision Realization VRO VRO
Office)
(Program Management
Office)
334. D. Governance at city level
Governance at the city level contributes to program efficiency through:
1) Active participation at district level ensures project completion
2) All aspects of execution coordinated more effectively by integrated Program Office.
3) Rapid solution of problems quickly by giving the Area Council a pivotal role in program execution
Housing City Steering Program Entity
Program Office Committee Area Prince representatives
Company Directors CEO
City Coordinating Company branch
Committee CEO City Entity officials
directors
City CEO
Projects Management
Office
Beneficiaries Developmental Operation and
Role Project Manager Funding Manager
Department Manager Housing Manager Maintenance Manager
34• Benefits city-level governance
• Strong focus on practical challenges through a systemized structure and clear
roles and responsibilities.
• Active participation of district council in supporting alignment between strategic
decisions and operational obstacles at city level.
• Active participation of main stakeholders (eg municipality, utility companies etc) with clear
roles and responsibilities at project level
• Active participation of local private sector (eg bank branch managers, local developers etc).
• Benefits of systemized governance
• Systemized program umbrella streamlines organizational and legislative challenges.
• Coordination of stakeholders at ministerial level improves speed of decision making
(eg budget approvals coordination between stakeholders such as the Ministry of Municipal and
Rural Affairs and the Ministry of Energy, Industry and Mineral Resources).
• Centralized platforms and processes promotes transparency and operational efficiency.
• Defined escalation process for structural issues (eg Strategic Committee and the Council
of Economic and Development Affairs).
35B. Strategic considerations
Subject Description
[1] Restoration and development of low- Improve living conditions by restoring
income housing. existing homes (concrete reinforcement) .
[2] Increase capital allocated to Real Estate Offer appropriate funding to quasi-
Guarantees Program, off-plan sale guarantees bankable customers through Real Estate
and self Construction. Funding Contracts Guarantee Initiative
(SAR290,000 guaranteed loan product).
[3] Improve ability of banking sector to service Ensure the banking sector’s ability to
the guaranteed loans. overcome and all future (guaranteed) loans
to the market within the next three years.
36Decision and
Subject Description
consequences
[4] The capacity of real estate • The ability of the real estate • Decisions to support and
developers to expand in order developers improve unity incentivize building technology
to satisfy demand. productivity by a factor of 10 suppliers, focusing on
by collaborating with leading international companies.
international and local
building technology suppliers.
[5] Transparency. • Transparency of data including • Activation and empowerment
Real Estate General Authority of Real Estate General
(REGA) price indicators to Authority.
enable real estate market to
workin parallel with the housing
market to set affordable
prices.
[6] Coordination of National • Provide work opportunities at • Competent entities
Work Opportunities Creation beneficiaries sites in by 2020 (eg Ministry of Economy
Program with beneficiary sites. aspirations on matching and Planning) to oversee
employment opportunities and employment and social
housing provision.
provision coordination.
[7] Expediting ownership deeds • Expediting ownership deeds • PIF responsible for
and activating land registry. and activating the land register activating the land register.
through the Public Investments
Fund (PIF) to facilitate
public-private sector partnerships.
37C. Conflicts and interdependencies
Overlaps with other related ministerial programs have been identified to enable the
resolution of any potential issues.
Related program Opportunities Potential issues
(1) Financial sector development • Large sums of capital • Focus on high risk real
Introduction of refinance estate mortgages.
companies to trade in real • Investor focus on the
estate mortgages. property instead of general
market.
(2) Financial balance • Offer savings programs for • High short-term investment
governmental employees to requirement versus objectives
decrease cash outflow of a balanced budget.
(3) National Transformation Plan • Coordination of infrastructure • Conflicting stakeholder
planning with stakeholders priorities could affect the
including the Ministry of development of new
Environment, Water and housing stock.
Agriculture and the Ministry
of Municipal and Rural Affairs.
(4) Public Investment Fund • Provision of financial support • Lack of coordination between
for housing sector National Housing Company
• Support delivered through and the Real Estate
Real Estate Development Development Company.
Company.
(5) Quality of life • Improvement urban patterns • Housing built with inadequate
and lifestyles through community infrastructure
development of housing and unplanned urban
communities. development..
38Chapter 5| Initiatives and Timeframes
Initiatives and Timeframes
A. Initiatives
The aims and objectives of the Housing Program have been condensed into a number of initiatives designed to deliver
Vision 2030 objectives relating to living conditions, GDP contribution, and regional development. As part of this
exercise, all existing housing programs were reviewed. The majority were subsequently incorporated into the Housing
Realization Program, with just a few referred for further investigation. Initiatives were designed following detailed
analysis of housing needs, according to international best practice and national legislation and regulations.
Desired
Strategic pillar Initiative Description Champion
outcome
Coordinating Developing • This initiative aims to optimize use of Ministry of • Optimal benefit from urban land to
population density vacant land within busy cities, to ensure Municipal and provide new housing for various
housing population density is spread evenly and Rural Affairs community segments.
policy with managed in accordance international
standards.
other national
programs and
policies
Access to Housing support • Financial support to increase home Real Estate • Financial support in form of an
for military ownership rates in the military by providing Development interest-free loan of up to 20% of
finance personnel (Real financial support for the first instalment of Fund the property values, up to
Estate Loan) funding to a maximum SAR140,000 in the SAR140,000.
form of an interest-free loan.
• Criteria for acceptance in the program:
To be on a waiting list in the Ministry of
• Housing or Real Estate Development Fund.
To be on active duty.
40Strategic pillar Initiative Description Champion Desired outcome
Access to Mortgage guarantees • Provision of real estate funding guarantees to enable Real Estate • Grow home ownership to 60%.
quasi-bankable beneficiaries to access funding Development
finance packages, especially particular private sector
employees and or entrepreneurs who often
Fund
considered uncreditworthy by reputable lenders,
forcing them to use usurers. The initiative also
supports applicants in remote areas and retirees,
other groups who have little access to funds because
of banks’ lending restrictions .
Guarantee for off-plan • Guarantees to enable applicants access to funds for Real Estate • Increasing owner rates from
sale and self self-construction projects and to buy from off-plan Development self-Construction and
Construction developers, options rarely supported by banks Fund off-plan sales, and guarantee
because of risks inherent in building, materials or projects to be awarded by the
.the inability of the developer or contractor Partnerships Team at the
Ministry of Housing.
41Strategic pillar Initiative Description Champion Desired outcome
Access to Development of • Provision of innovative financial products that Real Estate • Introduction of new housing finance
housing funding will raise the level of funding solutions and Development products.
finance products increase the percentage of ownership, as the
technical link represents the biggest obstacle in
Fund • Reduce the time needed to get
housing finance.
the housing program • Increase the quality of the
information required from funding
bodies
• Increase efficiency of funding
solutions among all stakeholders.
• Issue financial documents or certificates of equal Real Estate • Provide liquidity necessary for Fund
Real Estate value, representing common quotas in the Development to meet its obligations.
Development Fund ownership of Fund assets that already exist, or Fund • Provide liquidity necessary for Fund
certificates will exist out of subscription revenues. This will to achieve investment objectives.
contribute to the liquidity necessary for the fund • Support the real estate funding market
to meet its obligations and achieve its investment in the Kingdom.
objectives. It will also support the real estate • Support the Saudi debt instruments
funding market and the Saudi debt instruments market.
market.
Overcoming • Review of legislation and regulation acting as Capital Market • Increase finance and investment
challenges facing real obstacles in the secondary real estate funding Authority available to the housing and real
estate financers to market. estate sector, including foreign
issue securities in the investments.
secondary real estate
funding market
42Strategic pillar Initiative Description Champion Desired outcome
Access to
Lease-to-own • Financial support to offer a clear course to Real Estate • Starting beneficiaries not entitled to
home ownership for beneficiaries not Development funding or developmental housing on
finance entitled to housing support in the form of
subsidized lease instalments.
Fund the pathway to home ownership,
contributing to an overall
improvement in social conditions.
Financial support for • Financial support targeted at beneficiaries to Real Estate • Providing housing support programs
beneficiaries entitled access funding through partnerships with the Development to suit all available funding solutions
to housing support finance sector in the form of a grant of up to Fund at participating funding entities, in
SAR500,000. The size of the grant is assessed order to provide suitable housing to
according to family income size according to beneficiaries in housing support
an approved matrix. The initiative also covers programs by the end of 2020.
added fees payable on the support.
43Strategic pillar Initiative Description Champion Desired outcome
Access to
Down payment • Financial support targeted at beneficiaries aged 45+ Real Estate • By 2020, to provide financial
subsidy program in the form of a 10% to 20% subsidy on their first Development support to target group covering
finance (zero-interest loan) housing repayment to a maximum of SAR140,000
depending on family income and size. This is given
Fund up to 20% of the property value to
a maximum value of SAR140,000.
as a loan repayable at the end of the funding period.
Beneficiaries must be referred to the program, over
45 years of age, and on a salary less than
SAR14,000.
Cooperative program • A joint program by the Ministries of Housing and Ministry of • Increase the ability of
with Ministry of Finance to facilitate housing finance for Finance beneficiaries to access funding and
Finance to facilitate government employees. This is done by issuing to build a savings culture amongst
housing loans for official guarantees for bank loans granted to quasi
- the people.
government bankable applicants in the public sector.
employees
Provide loans to Those with homes not built with concrete are not Real Estate • Raising the ownership rate of
improve uninhabitable part of the 50% ownership baseline of the Development reinforced concrete units.
homes Housing Program. These people are addressed Fund
with an initiative to enable them to financial
support to help with home improvements, with
the aim to enable the transition from
unreinforced concrete houses to reinforced
concrete dwellings.
44Strategic pillar Initiative Description Champion Desired outcome
Access to Program to support The initiative is summarised in two parts: Ministry of • Reducing difficulty in paying house
citizens who are • Supporting the citizens who are unable to pay Housing rent
finance unable to pay housing housing rent in accordance with the Bureau of
Experts Decision No. (405), through the payment
Family stability
rent (Rent Support)
of the rent for those against whom an execution
order had been issued and list them on
developmental programs to help them not to fall
in distress again.
• supporting citizens rent who are unable to pay the
instalments of housing real estate finance, in
which an eviction order had been issued on the
house and sell it to settle the debt of the financer,
through applying the same standards and
mechanism to be applied on those having
difficulty in paying the house rent.
Development Developing • Developing partnership mechanisms between the Ministry of • providing real estate offered, increase
partnership with Ministry of Housing (public sector) and real estate Housing the number of housing units available
of suitable private sector developers (private sector) in order to develop
housing products for those entitled on the Ministry
for allocation and sign contracts with
beneficiaries.
developers on
housing at government lands lands. This initiative aims to provide the housing
units at the price and quality suitable to those
(Ministry of Housing
affordable Lands) entitled and achieve the strategic objectives of the
Ministry, represented in increasing the housing
prices offered and increasing the rate of ownership by
2020, through optimal benefit from Ministry lands
to develop multiuse residential neighbourhoods and
districts and a mix of various income brackets.
Supporting
• Encouraging private sector developers through the Ministry of • Enabling real estate developers of
facilitation of procedures and acquiring the Housing comprehensive development
partnerships and necessary licenses (ETMAM Centre), granting sustainable communities and
investment with the motivating exceptions and partnership programs neighborhoods.
private sector to through the direct investment in the Project, for the • providing real estate offered and
motivate the purpose of developing housing projects at increasing productivity to provide
development of reasonable prices on private sector lands. This suitable housing products.
initiative aims to provide the housing units at the
housing products
price and quality suitable to those entitled and
• Increasing the number and volume of
(Developers’ lands) partnerships with the private sector to
achieve the strategic objectives of the Ministry,
develop new projects in the housing
represented in increasing the offered and increasing
the rate of ownership, through conducting sector.
partnership agreements with private sector
developers on their lands to develop multiuse
residential neighbourhoods and districts and a mix
of various income brackets.
45Strategic pillar Initiative Description Champion Desired outcome
Development Partnership with • Program to exploit unused urban land by Ministry of • Optimal land use in all the
private landowners incentivizing landowners to develop housing Housing Kingdom’s urban areas, contributing
of suitable to develop housing projects to achieve housing targets while to increasing the national housing
on idle land. maintaining profitability for landowners . stock with suitable units at affordable
housing at Support to landowners partly comes in the prices.
affordable form of expert input from experienced
developers and consultants in partnership with
prices the Ministry.
Joint development of • Working in partnership with those government Ministry of • Increasing government land available
housing projects on bodies with large workforces to develop Housing for housing development in
government-owned government- owned lands near these accordance with the needs of jobs
lands (Institutional employment centers which provide a range of market, by prioritizing employees of
Housing) ownership pathways suitable for all groups. the government entity owning the
land.
Development of • Infrastructure development (eg roadways and Ministry of • Establishing basicinfrastructure on
Ministry of Housing paving) on Ministry of Housing owned lands Housing Ministry of Housing land to enable
owned land to enable the development of housing projects. further development.
46Strategic pillar Initiative Description Champion Desired outcome
Development Adopting and
investing in advanced
• Housing Program to champion modern
construction technology and international best
Ministry of
Housing
• Increasing the localization of content
in regard to m odern building
of suitable building technology practice, promoting and investing in its adoption technologies, which will contribute to
(4.0) by developers throughout the Kingdom. increasing the local content in the
housing at housing sector from 54% to 74%.
affordable • Indigenization of modern building
technologies.
prices • Increasing the number of companies
specializing in 4.0 technology.
• Increase national investment in future
technologies.
Establishing a • Strengthening the construction sector through a Ministry of • Developing the self construction
platform to encourage collaborative platform sharing best practice Housing platform through designing
housing construction standards in efficient modern building standardized models to develop high
technologies approved by the Ministry of quality housing units, including by self-
-build market,
Housing. This is targeted at the self build loans
and small and medium businesses seeking to • Reduce build time by 50% build cost
expand and participate in Ministry projects. by 30%.
Design and
• Adopting modern building technologies Ministry of • Promote the use of modern building
suitable to the local environment. Housing technology in the housing sector.
implementation of the
• Building an operational model for modern • Reducing the duration and cost of
industrial building technologies to increase productivity, construction projects.
mechanization of the reduce cost and increase quality. • Creation of 18,000 jobs.
sector • Encourage the construction of factories
producing prefabricated housing units and
other modern technologies.
47Name of Champion
Strategic Pillar Description Desired outcome
Initiative
Development Financing Startups
which adopt creative
• Encouraging startups which address the challenges
in the housing sector by establishing a fund within
Ministry of
Housing
• Developing new local building
and construction technologies
of suitable and innovative the Ministry of Housing in cooperation with the supporting increasing the local
solutions in housing Small and Medium Enterprises Authority, content in the housing sector from
housing at sector investment capital funds and incubators. 54% to 74%.
affordable
prices
Saudi Real Estate • Promote modern and future building technologies Ministry of • Increasing the percentage of the
Institute to young Saudis by expanding the role of the Saudi Housing local content in modern building
Real Estate Institute in the provision of technologies, which contributes to
professional training in new technologies. increase the local content in the
housing sector from 54% to 74%.
Cooperative Housing • Legislation, financial support and awareness Ministry of • Increase of affordable units for
Program to build campaign to establish and encourage housing Housing middle income households.
affordable houses cooperatives to develop affordable housing with • Increase number of cooperative
modern, cost effective building technologies. housing associations and raise
their profile and popularity.
• Reduce maintenance and
operational costs of developmental
housing by supporting and
maintaining a portion of
developmental and cooperatives
homes.
Developing facilitated • Develop facilitated housing program for the Ministry of • Increase number of
housing programs purpose of providing units based on the principle Housing developmental housing units to
of benefitting the citizens in most need registered serve the households in most need
- and Eskan Portal, in
in social security programs registered in the social security
cooperation with the non profit sector and social and Housing Portal, based on
responsibility programs in the private sector. usufruct.
48Strategic pillar Initiative Description Champion Desired outcome
Development Centralized • Reducing the cost of building materials Ministry of • Reduce the cost of building by
procurement used in Ministry of Housing projects and Housing economies of scale of building
of suitable increasing quality and profitability through materials.
housing at standardizing building materials and
organizing partnerships among the suppliers
Improve quality of building
materials by standardization.
affordable and developers to provide housing units at Improve contribution of the housing
- GDP to SAR100
reasonable price and high quality. sector to nonoil
prices millionby 2020.
Sustainability • A comprehensive system to drive high
- quality Ministry of • Monitor housing product quality and
initiative sustainable development of the building sector, Housing reduce operation and maintenance
through implementing mechanisms and costs of 260,000 units.
procedures to ensure and monitor the quality • Reduce risks and costs of
of building, and to promote efficient water and construction providing guarantees
energy consumption. and insurance for 260,000 units.
• Job creation: auditors (1,500),
engineers for small and medium
enterprises (5,000).
National platform for • A platform to support residents in joint Ministry of • Provide a secure, organized and
joint ownership ownership arrangements (eg apartments and Housing sustainable environment for housing
housing complexes), protecting the rights of complexes.
owners and regulating the relationship of • Obtain SAR195 million of non -oil
owners and occupiers of the jointly owned revenue.
units by monitoring utilities and complex • Generate 4400 jobs by 2020.
management services and playing the • Support 108 small and medium
educational and informational role for housing enterprises in utility and complex
coexistence. management by 2020.
• Return on GDP of SAR405 million
by 2020.
49Strategic pillar Initiative Description Champion Desired outcome
Development Eskan 1 Eskan 2 • Eskan 1 aims to provide zero-interest loans Ministry of • Increase rate of home ownership.
of SAR500,000 in partnership with the Housing
of suitable private sector on developed Ministry lands
housing at on a site west of King Khaled Airport in
Riyadh.
affordable • Eskan 2 aims to provide SAR500,000
building loans to develop Ministry lands in
prices Jeddah, Medina, Qatif and Dammam.
Operational Inclusive Experience • A platform allowing beneficiaries to search for Ministry of • Increased options available to
(technology and housing product, organize surveys and Housing citizens.
improvement customer service) communicate with banks for initial loan • Improved customer journey
approval. It also connects developers and satisfaction scores.
marketers to improve the customer experience
for home buyers.
Rehabilitation of • Improving branch facilities and provide Real Estate • Improve interaction with
REDF branches and training for REDF staff so they can better and Development beneficiaries and increase beneficiary
launch of beneficiary provide consultancy services and Fund satisfaction.
service centers to comprehensive financial mediation to • Promote Fund services in a creative
provide advisory and beneficiaries. manner.
financial services • Improve work procedures for
providing services.
50Strategic Pillar Name of Initiative Description Champion Desired outcome
Providing • Strengthening the electrical system by Ministry of • Provide infrastructure for
electricity services building generation plants to meet the Energy, housing projects according to
growing demand. Industry and the duration and cost plans of
Mineral Housing Program.
Resources
Providing sewage • Expand sewage services and increase Ministry of • Increase national coverage to
services coverage to eliminate environmental harm Environment, reach 65%
and keep up with the urban growth. Water and
Agriculture
Provide potable • Expand water services and increase Ministry of • Increase the number of people
water coverage to keep up with the growth in Environment, provided with potable water to
demand. Water and 34.9 million people (future growth
Agriculture included)
• Increase the percentage of water
coverage to 92% of the population
by 2020.
Operational • Extend the water network by
improvement •
15,000km by 2020.
Provide water services to more
than 500,000 homes by 2020.
Reuse of treated • Increase Ministry of • Increase reuse of sewage water to
water save Environment 35% by 2020.
improving Water and • Increase the number of advanced
improving Agriculture treatment plants to 20 by 2020.
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