How and What Kind of Real Estate can be Bought in Saudi Arabia: Investor Support and ROI

Not long ago there was an opinion that Saudi Arabia was quite closed to foreign investors, but recently the situation has begun to change radically. The Saudis are interested in attracting foreign capital and are trying to provide comfortable conditions for those who are ready to invest in the development of the kingdom.

How does Saudi Arabia compare favorably with the more “promoted” countries of the Persian Gulf? What support measures are provided for foreigners and what restrictions still exist? What kind of housing can residents of different countries buy in Saudi Arabia and under what conditions? The founder of the Etazhi real estate agency in Dubai, Danis Latypov, told us about all this. 

Saudi Arabia is experiencing a real construction and cultural revolution.

Grand projects and attracting foreigners

— Today, Saudi Arabia is experiencing a real construction and cultural revolution. The country is becoming more and more open to foreigners, both in terms of tourism and in terms of business development and investment, and is actively implementing, without exaggeration, some of the most ambitious projects in the world

Just look at the NEOM project — a futuristic city with cleaning robots, underground transport highways and a giant mirrored “lying” skyscraper that will stretch for tens of kilometers from the Red Sea coast to the desert.

In addition, the country plans to create its own island beach complex similar to the Maldives and a high-tech ski resort. And most importantly, all these projects are not fantasies and dreams: construction is already underway. The combination of oriental flavor and future technologies is about modern Saudi Arabia.  

The government plans to “jump off the oil needle” by 2030 and take a leading position in the Middle East. To implement this, foreign financial investments are needed. Therefore, Saudi Arabia is gradually opening its doors to citizens of other countries.

Opportunities and limitations when buying real estate in Saudi Arabia

— Currently, a foreign investor can own one property in Saudi Arabia without the purpose of resale. Not long ago, a program called Premium Residency was launched with a number of privileges for citizens of other countries who want to invest money in the development of the kingdom. Its participants will be able to obtain a residence permit, the right to leave the country, change jobs, register real estate as their own and other benefits.

For those wishing to purchase housing in the kingdom, there are two options for participating in the program

• Real estate investor. To obtain a visa, you must buy (without mortgage loans) a finished home worth at least 4 million Saudi riyals (just over $1 million at the current exchange rate), and confirm the value of the property by accredited appraisers.
• Privileged accommodation. The investor must confirm his financial solvency and the availability of the required amount of funds, and pay a fee depending on the preferred length of stay. Up to 5 years — 100,000 Saudi riyals (at current exchange rates — approximately $26,500). For a visa with an unlimited period — 800,000 riyals(~$212,000). 

— Today, foreign investors have many opportunities to work and live in Saudi Arabia. The ban on purchasing housing for non-residents has been lifted, new laws are regularly adopted to support citizens who are ready to invest their capital in the development of the country. However, some limitations remain.

Foreign citizens are still prohibited from purchasing any housing in the cities of Mecca and Medina. These territories are considered shrines of the Muslim world and only Saudis can own square meters there. However, visitors can inherit an apartment or villa in these cities.

In addition, foreigners have some restrictions on the disposal of property. To stop speculation in the Saudi Arabian real estate market, the authorities have introduced a ban on the sale of housing by foreigners earlier than 5 years after registration of the property. 

It is quite possible that these restrictions will be significantly weakened in the coming years, since the government is currently developing a law to support foreign investment. It is planned to come into force in 2025.

Expected return – up to 25% per annum.

Advantages of investing in real estate in Saudi Arabia

— Let’s mention major advantages:

• Advantageous location: accessibility to major international trade routes and high potential for global entrepreneurship.
• Financial stability: impressive oil reserves and a carefully thought-out strategy for the development of infrastructure and economic sectors.
• Developed infrastructure: convenient logistics network for all types of transport, ultra-modern telecommunication systems.
• Loyalty to Russian-speaking citizens: about 100 thousand Russians already live in Saudi Arabia, including members of their families. The Saudis highly value Russian-speaking specialists and, by the way, often take Slavic women as wives.
• High tourism potential: hot climate, oriental flavor along with stunning futuristic projects, endless deserts and Red Sea beaches attract hundreds of thousands of tourists.
• High population: today more than 36 million people live in the kingdom (while, for example, in the UAE there are only about 10 million).
• Relatively low cost per square meter of housing: you can purchase an apartment or villa in the country at a fairly attractive price — from $5,000 per sq. m., while in the UAE prices start from approximately $10,500 per square meter.
• Doing business without bureaucracy: convenient digital services and transparent registration conditions almost completely eliminate bureaucratic delays and administrative obstacles when newcomers enter the market.

The main myths associated with such investments

—There are three main myths associated with investing in Saudi Arabian real estate:

• Myth No. 1. High investment risks. In fact, the government of the kingdom is trying to stabilize the real estate market as much as possible and adheres to a clear strategy for the development of the state, and also takes measures to support foreign investors and create a favorable business climate in the country.
• Myth No. 2. Inaccessibility for foreign investors. In reality, strict laws and restrictions are a thing of the past. The state, on the contrary, seeks to attract investors from abroad and simplify the process of purchasing real estate.
• Myth No. 3. Inflated prices. In fact, property prices in Saudi Arabia can be very attractive, especially compared to other Gulf countries. The main thing when buying a home is to choose the right region and assess the market situation. 

Return on investment in real estate of the Kingdom

— Foreign investors have already turned their attention to this Arab country, which is tempting from all points of view. Many are waiting for the adoption of a new package of benefits. Therefore, according to our forecasts, in the first years after the opening of sales for citizens of other countries, the return on investment will be very high — from 20 to 25% per annum. This will be due to demand obviously exceeding supply.

In general, today in Saudi Arabia a slow increase in prices for villas and a decrease in the cost of square meters in apartments is expected. However, these forecasts do not apply to the capital of Riyadh, where the rate of price growth is expected to slow down.