Deutsche initiates Saudi Real Estate, Dar Al Arkan

Nov 9 (Reuters) - Deutsche Bank began coverage of Saudi developers Saudi Real Estate Co 4020.SE and Dar Al Arkan 4300.SE with "buy" ratings, saying a fast-growing population and declining household size should fuel housing demand.

Saudi Arabia has remained relatively resilient despite global headwinds, with property prices down 15 percent year-over-year during the third quarter, against an average 40 percent drop in other Gulf Cooperation Council (GCC) countries, Deutsche Bank wrote in a note to clients dated Nov. 8.

"We believe government initiatives to enhance living standards and improve mortgage access will boost affordability and unlock huge latent demand," Deutsche Bank said.

The Kingdom is expected to pass a long-awaited mortgage law next year, increasing transparency regarding foreclosures and thus reducing the risks for lenders, Deutsche said.

Borrowers should also benefit from more flexible and less costly finance schemes, which would make housing more affordable to them, the brokerage added.

The brokerage set a price target of 33.8 riyals on Saudi Real Estate and a target of 21.2 riyals on Dar Al Arkan.

Deutsche Bank also began coverage of Arriyadh Development 4150.SE and Emaar Economic City 4220.SE with "hold" ratings.

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