Hossam Y. Radwan

TBY talks to Hossam Y. Radwan, CEO of Saudi Mortgage Guarantees Company (Damanat), about mortgages, the real estate sector, and goals for the coming year.

Can you provide an overview of Damanat’s mission and goals as a mortgage guarantee services firm in Saudi Arabia?

Damanat in Arabic means guarantee. It started as an initiative by the Minister of Housing to help low-income Saudis own their first homes. The Kingdom’s goal is to reach 70% home ownership by 2030, and it would not have been possible to achieve this without addressing this important segment of society. Saudi Arabia is currently on its way to achieving that goal, at just above 60%. Overall, the role of Damanat is not widely understood because the company is new and typically works behind the scenes. We are a B2B entity that deals exclusively with banks and financial institutions, enabling them to issue mortgages to the lower-income segment of society. The initial target were individuals earning SAR3,000-10,000 a month, though we are widening the criteria due to economic issues and external factors such as interest rates and affordability.

What have been the major achievements of Damanat since its inception?

When I joined in January 2023, my mission was to accomplish three things. One is to be registered with the Ministry of Commerce, and we ticked that box in April. The second was to get a SAMA license, that we also achieved on July 9. We also relaunched existing products after receiving board approval. One of the things I am most proud of is developing a professional, solid team at Damanat that we managed to attract even though most in the market do not know much about us. We had to recruit a chief compliance officer, a chief risk officer, and a chief financial officer, among other positions, and saw significant buy-in from experienced people in the market. We have successfully navigated the team building phase that was mostly related to fulfilling SAMA’s requirements.

How does Damanat plan to collaborate with financial institutions to foster the development of the mortgage market?

Pre-2023, 117,000 guarantees were issued amounting to a total market exposure of SAR55 billion. This is already a sizable portfolio that we intend to grow further. These are more skewed toward public-sector employees, though we are also looking at different sectors or segments of the market to ensure a wider reach. We have bolstered our team and now have people communicating directly with banks to address market needs and tweak products accordingly. The Saudi Real Estate Finance Company has been playing a major role in the mortgage market eco-system whereby they acquire mortgages from banks, some of which Damanat guarantees. Accordingly, we work together with SRC to close the loop by working with banks and developing a tri-party agreement of sorts.

How does Damanat envision its role evolving in the coming years, considering the dynamic nature of the real estate and financial sectors?

We will establish ourselves as a key enabler within the real estate market. We look at anticipating default rates and determine how that will affect the business overall. As well, we are working on mechanisms to help those who might ultimately face default, helping them restructure so that they can continue with the program. Damanat is part of a larger ecosystem that enables Saudis and hopefully, soon, non-Saudis as well, to own their homes. We are relaunching our existing product MGS after tweaking it to better address the changing environment in the market today and banks’ concerns. Any new guarantee that is issued to banks will have a small fee, which is why we are calling the revamped product MGS Plus. Our other product, MGS 2.0, will enable us to tap into a wider audience. For Damanat to issue a guarantee, historically, the applicant had to qualify for the Madoum program established by the Real Estate Development Fund (REDF). MGS 2.0 does not have that prerequisite given the changes in the market.

What key milestones or targets does Damanat aim to achieve in the coming year?

Our main priority is to launch new products.. We are currently working on developing an off-plan product that will help developers, contractors, and consumers, especially if consumers do not qualify for bank loans to purchase a home. This is a product that we are working on in conjunction with banks to help consumers participate in the off-plan initiatives taking place within the housing ecosystem. We are confident that we have a solid product coming to the market and expect to see positive results by the end of the year.