Kafaa Capital has reported that its total financing for real estate and contracting projects has neared SR100 million ($26.6 million) since the company began operations, with no defaults recorded so far. Moving forward, the firm plans to prioritize funding for real estate investment ventures and development projects, alongside the distribution of investment funds.
The company is in the process of obtaining licenses from the Real Estate General Authority to introduce a fractional ownership product aimed at expanding access to multiple real estate assets. This new offering will allow investors to participate with contributions starting at SR2,000, targeting small-scale savers who wish to diversify their real estate portfolios and reduce vacancy risks.
Yousef Al-Zumai, founder and chairman of Kafaa Capital, indicated that the recent decrease in property prices coupled with greater supply is expected to drive renewed demand for real estate. This surge is anticipated among local buyers seeking residential properties or rental investments, as well as from increased foreign investment and property ownership by non-Saudis.
According to Al-Zumai, financing options through Kafaa Capital provide returns ranging from 10 to 17 percent. The company evaluates financing applications by considering creditworthiness, projected cash flows, and collateral adequacy. It also accounts for the payment dynamics inherent to the contracting sector, especially regarding "back-to-back agreements" under which subcontractors’ receivables depend on payments made to the main contractor. To address potential delays in receivables, Kafaa Capital requires appropriate guarantees to protect the full recovery of capital and maintains financing flexibility to accommodate payment timing issues.
In terms of fund distribution, the company plans to offer investors access to real estate funds, fixed-income funds, and private funds managed by licensed financial firms under the Capital Market Authority. Kafaa Capital intends to present these options through a “mini market” platform, facilitating investment management for surplus liquidity subject to each fund’s subscription and redemption conditions.
To support its strategic initiatives, Kafaa Capital recently conducted a market study focusing on real estate trends in Riyadh’s five primary geographical areas aligned with municipal zoning updates. The study assessed demand levels and pinpointed investment opportunities.
Several factors are expected to influence real estate activity in the coming period, notably in Riyadh, Jeddah, and the holy cities. These include comparatively lower taxes and fees than major global capitals, growth in religious tourism, strong momentum in the Hajj and Umrah sectors, and opportunities linked to Saudi Arabia’s Premium Residency program, also known as the “golden visa.”