What are the mandate and the activities of NHSC?
NHSC is 100% owned by the Ministry of Housing. The ministry offers both services to citizens and products, and NHSC takes care of the services. We have four main services, the first of which is the Home Owners' Association, or Mullak. For a variety of demographic and economic reasons, Saudis are moving into jointly owned properties. For smooth living in these communities, we need homeowners associations that take care of common areas and assets through the collection of appropriate maintenance fees from owners. We have to tackle this carefully to make sure our projects with apartment buildings are accepted by end users. Secondly, we launched the Saudi Real Estate Institute (SREI), a training center focused on raising the maturity level of real estate practitioners in the market. Previously, anyone could become a broker, though this is no longer the case. To practice real estate professions, individuals need to have the appropriate training and credentials that are facilitated through SREI. The third business line under NHSC is the Sustainable Building, a brand seal we are investing in and quality stamp that will be placed on every individual house. For those who purchase property, this stamp will assure them of the quality of the building in terms of livability, energy savings, and other important aspects. It is a significant and ambitious project and requires a great deal of inspections. Our services are anchored around the newly established Sustainable Building Platform. We are working with all the related government agencies and service providers to roll out services rapidly. Our final business line is the Title Subdivision program, or Farz, which is purely an engineering service offering to subdivide jointly owned properties and ensure owners' entitlements. In the future, new business lines may be added based on strategic alignment of new services that need to be offered by the ministry.
What is envisioned with this restructuring of services under the ministry?
On a national level, we intend to lower the government's expenses while ensuring citizens receive better services. Vision 2030 has outlined some of the most essential programs as game changers, and the Building Technology Initiative will be a prime example. We are mandated to supply the market with 680,000 units by 2022; the allocation should be completed by 2020 and delivery of keys should take place by 2022. Achieving this fairly ambitious mission is impossible if we continue to follow the traditional methods of building. Therefore, we are moving toward industrializing construction, and instead of building everything onsite, we seek to build offsite in factories, replacing low-skilled labor with high-skilled labor. We have economies of scale and volumes, which makes the business viable for any investor. The government has committed SAR13.9 billion (USD3.7billion) as a stimulus package for the private sector to invest in those factories. This will significantly fix the housing problem, create jobs, and boost GDP overall. NHSC is an enabler for the private sector, and we are opening the market to foreign investors for them to understand the opportunities available here in Saudi Arabia. Thus far, we have brought Turkish, Chinese, and American investors on board.
How does the financing organization fit into that new set up of the housing and development ecosystem?
The ministry's vision is anchored by three pillars: supporting supply, which we are a part of; enabling demand, which is done by newly established companies like the Saudi Real Estate Refinancing Company; and putting the necessary regulations in place to make it an attractive market. Once we complete our mandate of constructing the housing projects under the set programs, we will have the opportunity to utilize this extra capacity for the region. Saudi Arabia can become a construction hub and support countries around us that have seen the destruction of their cities in recent years.