SRC and Hassana launch mortgage-backed securities to boost Saudi real estate investment

The Saudi Real Estate Refinance Company (SRC), a subsidiary of the Public Investment Fund (PIF), has entered into a memorandum of understanding (MoU) with Hassana Investment Company to introduce the region's first residential mortgage-backed securities (RMBS) in Saudi Arabia. 

Key Objectives of the Partnership:

• Enhancing Liquidity: The issuance of RMBS aims to increase liquidity within the real estate finance sector, facilitating more efficient capital flow and enabling financiers to offer affordable housing solutions. 
• Diversifying Investment Opportunities: By introducing this innovative asset class, the partnership seeks to attract a diverse base of local and international investors to Saudi Arabia's secondary mortgage market, thereby broadening investment avenues. 
• Supporting Vision 2030: This initiative aligns with Saudi Arabia's Vision 2030 objectives, particularly the Housing Program and Financial Sector Development Program, which aim to increase homeownership rates among Saudi citizens and deepen the financial markets. 

Statements from Leadership:

• Majeed Al Abduljabbar, CEO of SRC, stated: "Our partnership with Hassana marks a significant milestone in supporting the evolution of the housing finance landscape and fostering the development of Saudi Arabia’s capital markets." 
• Saad Al Fadhli, CEO of Hassana, commented: "This collaboration establishes a new standard for partnerships, enabling the development of scalable financial solutions that contribute to the Kingdom’s economic development goals." 

Market Context:

Saudi Arabia has been experiencing a surge in mortgage lending, with banks' mortgage lending reaching a near three-year high of $2.7 billion in November 2024, marking a 51.23% year-on-year increase. 

The introduction of RMBS is expected to further stimulate the real estate market by providing financiers with increased liquidity, enabling them to offer more competitive and accessible housing finance options to individuals. 

About the Entities:

• SRC: Established by PIF in 2017, SRC plays a pivotal role in developing Saudi Arabia's real estate finance market. Licensed by the Saudi Central Bank, it provides liquidity to financiers, supporting the Kingdom's housing ecosystem and contributing to the objectives of the Housing Program under Vision 2030. 
• Hassana Investment Company: As the investment arm of the General Organization for Social Insurance (GOSI), Hassana is dedicated to delivering sustainable financial returns that drive long-term economic growth through strategic investments across diverse sectors. 

This collaboration between SRC and Hassana represents a significant advancement in Saudi Arabia's financial market, introducing innovative financial instruments that are poised to enhance the real estate sector's growth and contribute to the broader economic development goals of the Kingdom.