MENA home finance market set for double digit growth

2011 News

Nov 22, 2011

MENA home finance market set for double digit growth

Major growth predicted for MENA housing finance market, provided sufficient regulations are implemented

The MENA mortgage market is set for double digit growth, experts concluded this morning, 23 November 2011, at the MENA Mortgage and Affordable Housing Congress, hosted at the Radisson Blu Hotel, Manama, Bahrain.  The event, from the organizers of Cityscape, is held under the patronage of the Central Bank of Bahrain, and in partnership with Sakana Holistic Housing Solutions and Naseej Properties.

‘The MENA population is growing at a rate of 2.1%, which is high in comparison to world population growth; and with approximately 60% of the population under 25 years of age, home ownership demand is huge.  Regional Governments in the post-Arab Spring era will be increasingly focused on housing and we believe that the market is likely to witness double digit growth over the next few years provided regulations evolve quickly to address the affordable housing segment,’ said R Lakshmanan, CEO of Sakana Holistic Housing Solutions, a key partner of the event with Naseej Properties.

When compared with international markets, negligible amounts of GDP are allocated to mortgages in MENA countries.  ‘While in countries such as the UK and the US, outstanding mortgage stock accounts for c.100%  of GDP, this figure drops to just under 1% on average in North Africa, 7% in the UAE, and just 2% in Saudi Arabia.  As these figures show, there is enormous potential for growth in the home financing market in the Middle East, and we foresee phenomenal growth for the sector in the coming years,’ said Alex Gemici, Managing Partner of Greenstone Equity Partners.

Despite this market growth potential, major challenges continue to restrict the development of the sector, an expert panel including Sakana Holistic Housing Solutions, Tamweel, Deutsche Gulf Finance and Saudi Home Loans highlighted.  A lack of adequate regulations, underdeveloped capital markets, lack of synergy between pension funds, insurance companies and mortgage providers, and insufficient credit bureaus were identified as the major challenges to the industry.  A shortfall in affordable housing provision was also highlighted as a major challenge to the industry, as will be discussed on day two of the event, 24 November.

Insufficient regulatory frameworks were especially highlighted as a challenge to the industry.  ‘This region needs to lead the rest of the world in showing how Islamic home finance is done – as the largest Islamic mortgage financiers operate in this region.  And what is really required is an adequate property law/regulations that are compatible with, and develop, Islamic finance’ said Oliver Agha, Partner at Agha & Co/Agha & Shamsi, the region’s frist Shari’ah compliant law firms.

Inaugurated by the Hussain Sharaf, Director of Islamic Financial Institutions at the Central Bank of Bahrain, the conference highlighted the major regulatory developments being pioneered by Bahrain’s Government in order to develop the market, increase activity and enable greater home ownership in the region.  Other experts gathered at the Summit included Saudi Home Loans, Deutsche Gulf Finance, Naseej, Dar Al Tamleek, Tamweel, Sakana Holistic Housing Solutions, Abu Dhabi Commercial Bank, as well as international experts from the International Finance Corporation (part of the World Bank Group) and the Canada Mortgage and Housing Corporation.

The MENA Mortgage and Affordable Housing Congress continues on 24 November 2011.  For more information visit or call +971 (0)4 407 2528.