Property developers support Saudi bourse at early trade

Property stocks helped lift the Saudi bourse in early trade Wednesday as two developers said they were in talks with the housing ministry to build more homes.

Shares in Dar Al Arkan Real Estate Development Co jumped 9.2 percent to 5.95 riyals, after surging by its daily 10 percent limit on Tuesday.

After the market close on Tuesday, the developer said it was in talks with the government to provide housing units under the kingdom’s economic reform plan. It did not give further details.

Emaar Economic City also said it was in talks with the housing ministry to build homes for Saudi citizens, and its shares surged more than 6 percent.

The Saudi government published a five-year National Transformation Plan (NTP) on Monday, part of a wider set of reforms launched in April as “Vision 2030”.

The economic reform plan targets increasing the percentage of Saudi families that own homes to 52 percent by 2020 from the current 47 percent. The document also said that the government aims to reduce the waiting period to obtain housing financing to five years by 2020 from 15 years at present.

The plan, which sets targets for government agencies and also includes spending on new initiatives in healthcare, mining and renewable energy, will cost an estimated 270 billion riyals ($72 bln) to implement. Finance Minister Ibrahim Alassaf said on Tuesday it will partly be paid for by making public sector efficiency savings and cutting spending on existing projects.

Dar Al Arkan has recorded declining profits in six of the last seven quarters, with its first-quarter 2016 numbers showing a 60.7 percent year-on-year drop, which it attributed to lower sales revenue.

Riyadh’s main index was up 0.3 percent after half an hour of trade, after gaining nearly 1 percent on Tuesday.

Source: Reuters