Is buying a property in the Diplomatic Quarter a good investment?

Last updated on December 14, 2023

Yes, the analysis of Riyadh's property market is included in our pack

If you've appreciated the diplomatic atmosphere and international community of the Diplomatic Quarter, you may have contemplated investing in a property here, becoming part of Riyadh's diplomatic scene.

Is it a good idea though? What's the current state of the real estate market in that area? Are property values appreciating or depreciating? Are investors seeing returns on their real estate investments? How's the demand for rentals?

We'll answer all these questions for you! When building and updating our property pack for Saudi Arabia, our team has been researching and surveying this area. In fact, there is significant customer interest in investing there. Therefore, we believe it would be beneficial to include some information about it in our property pack.

Why do property buyers like investing in the Diplomatic Quarter?

The Diplomatic Quarter in Riyadh stands out as a sought-after location for property buyers due to several distinct attributes.

First and foremost, its design and infrastructure set it apart from other real estate markets. This area, renowned for its modern urban planning, offers a harmonious blend of residential, commercial, and diplomatic spaces.

The streets are well-organized, and there's an emphasis on greenery and open spaces, which is quite unique compared to the more densely built areas of Riyadh.

One of the key factors that elevate the Diplomatic Quarter's appeal is its emphasis on security and exclusivity. Being the hub for foreign embassies and international organizations, it boasts enhanced security measures, which is a significant draw for those who prioritize safety and privacy.

This aspect alone makes it a more attractive option than many other areas in Riyadh, where such stringent security might not be as prevalent.

The Diplomatic Quarter's rise to popularity can be traced back to its inception and gradual development. It became particularly prominent as a residential area in the last few decades, especially as Riyadh expanded and the demand for high-quality, secure living spaces grew.

The sustained interest in this area suggests that its appeal is not just a passing trend. This is backed by the ongoing investments in infrastructure and the continuous influx of diplomatic and international communities, indicating a stable demand for properties here.

The type of people attracted to the Diplomatic Quarter is quite diverse but generally includes diplomats, expatriates, and high-income local residents. This mix contributes to a cosmopolitan atmosphere, which is another unique attribute of this area.

The presence of various international communities also means a variety of cultural, dining, and entertainment options, further enhancing its appeal.

However, it's important to consider some potential drawbacks. The exclusivity and high security can sometimes lead to a sense of isolation from the rest of Riyadh.

Also, the property prices and cost of living here are generally higher than in other parts of the city, which might not be feasible for everyone.

Additionally, the area is primarily residential and diplomatic, so it might lack the bustling commercial and industrial vibrancy found in other parts of Riyadh.

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Why is Diplomatic Quarter a nice place to live?

Living in the Diplomatic Quarter offers a unique and often appealing lifestyle, especially for those who value a blend of modernity, security, and cultural diversity.

The lifestyle here is marked by a blend of local Saudi traditions and a strong international influence, thanks to the diverse expatriate community. This melting pot of cultures creates a unique environment where residents can experience a variety of cultural events, cuisine, and social interactions.

The expat community in the Diplomatic Quarter is vibrant and active. Given that it's a hub for embassies and international organizations, the area attracts a significant number of diplomats and foreign workers.

This results in a supportive network for newcomers and a range of community events and activities that cater to various international tastes and preferences.

Living in the Diplomatic Quarter, however, does come with a higher price tag. The cost of living here is generally above average compared to other parts of Riyadh. This is reflected in housing prices, day-to-day expenses, and the cost of amenities.

Safety is a standout feature of the Diplomatic Quarter. With heightened security due to the presence of diplomatic missions, it is considered one of the safest areas in Riyadh. This sense of security is a significant factor for many residents, especially those with families.

Speaking of families, the area is well-equipped with facilities and amenities. There are reputed schools like the British International School of Riyadh and the American International School Riyadh, offering international curriculums.

For healthcare, facilities like the King Faisal Specialist Hospital and Research Centre provide high-quality medical services. Shopping and leisure are also well-catered for, with centers like the Hayat Mall and the Riyadh Park offering a range of shopping, dining, and entertainment options.

The quality of infrastructure in the Diplomatic Quarter is top-notch. Roads are well-maintained, utilities are reliable, and internet connectivity is generally excellent, catering to the needs of a globally connected community. This makes both living and working in the area convenient and comfortable.

Accessibility is another strong point. The Diplomatic Quarter is well connected to other parts of Riyadh, making commuting relatively easy. For travel beyond the city, it’s conveniently located within a reasonable distance from major transport hubs like the King Khalid International Airport.

Public transportation options, however, are more limited compared to other areas, but this is gradually improving with Riyadh's expanding public transport network, including bus services and the developing Riyadh Metro project.

How much does it cost to buy real estate in the Diplomatic Quarter?

If you need a detailed and updated analysis of the prices, rents and yields, you can get our full guide about real estate investment in Saudi Arabia.

Understanding the property market Diplomatic Quarter requires looking at various aspects, from the types of properties available to potential future trends.

The area primarily offers a range of residential properties, including apartments, houses, and luxury villas. The demand in this neighborhood often leans towards luxury villas and high-end apartments, largely due to the area's prestige, security, and the affluent demographic it attracts, including diplomats and high-income local residents.

In terms of new developments versus resale properties, the Diplomatic Quarter has a mix of both. There are established properties that often come onto the resale market, and simultaneously, new developments are also underway, catering to the growing demand for modern and luxurious living spaces.

The price range for properties in the Diplomatic Quarter varies but tends to be on the higher side compared to other areas of Riyadh. For a rough estimate, prices per square meter can range significantly, but luxury properties in prime locations command premium prices.

It's essential to note that property values in this area have been subject to change over recent years, influenced by factors like economic trends, the influx of expatriates, and overall market conditions in Riyadh.

Looking at future developments and city planning changes, there are always new projects on the horizon in Riyadh that could impact property values in the Diplomatic Quarter.

These include infrastructure improvements, new commercial developments, and expansions of public facilities. Specific names and details of these projects would require current market research, but they typically aim to enhance the area's appeal and accessibility.

Predicting the real estate market's direction in the coming years involves considering various factors, including economic policies, population growth, and global trends affecting the expatriate community.

Given the Diplomatic Quarter's established prestige and ongoing developments, there's a potential for continued demand, which could keep property values stable or possibly even increase.

Factors that indicate a potential increase in value include the area's continuous development, the ongoing demand for high-end, secure properties, and Riyadh's overall growth as a global city. The Diplomatic Quarter's unique positioning as a hub for international diplomacy and expatriate living also adds to its long-term appeal, making it a potentially lucrative area for real estate investment.

Where is the best area to buy a property in the Diplomatic Quarter?

When considering where to buy a property in the Diplomatic Quarter, it's essential to understand that this area, while relatively compact, offers diverse options that cater to different preferences and budgets.

The Diplomatic Quarter is known for its well-planned layout, green spaces, and overall tranquility, but within this, there are variances in atmosphere, property types, and prices.

Some parts of the Diplomatic Quarter are known for their luxurious and expensive villas. These areas often provide a more private and exclusive living experience and are favored by those who prioritize space, privacy, and a quiet environment.

Naturally, properties in these zones tend to be at the higher end of the price spectrum, reflecting their size and exclusivity.

On the other hand, there are areas within the Diplomatic Quarter where you can find more compact properties, such as apartments and smaller homes. These areas offer a more community-oriented atmosphere, with easier access to shared amenities like parks, shopping centers, and cafes.

The properties here are generally more affordable than the larger villas but still offer the benefits of living in a prestigious and secure neighborhood.

For buyers interested in up-and-coming areas within the Diplomatic Quarter, it's worth keeping an eye on new developments. These are often designed to meet modern living standards and can offer a blend of residential and commercial spaces.

Newly developed areas might offer more contemporary housing options, like modern apartments and townhouses.

However, specific names of these developments would require current local real estate insights.

If you're considering where to buy a property, areas near key amenities like international schools, diplomatic missions, and healthcare facilities are always a good bet. These areas offer convenience and are often well-maintained, contributing to a higher quality of life and potentially better property value retention.

Conversely, areas that might be less advisable to consider are those undergoing significant construction or redevelopment. These areas can be subject to noise, dust, and general disruption, which might not be ideal if you're looking for a peaceful residential environment.

Additionally, areas farther from the central facilities and amenities of the Diplomatic Quarter might lack the convenience and charm of more centrally located neighborhoods.

Here is a summary table to help you visualize better. If you need more detailed data and information, please check our property pack for Saudi Arabia.

Area	Atmosphere	Property Types	Price Range
Luxurious Villa Zones	Private, Exclusive, Quiet	Expansive Villas	Higher End
Community-Oriented Areas	Community-Focused, Accessible	Apartments, Smaller Homes	Moderate
New Developments	Modern, Trendy	Modern Apartments, Townhouses	Varies
Near Amenities	Convenient, Well-Maintained	Varied	High Demand
Areas Under Construction	Noisy, Disruptive	Varied (Potential Future Developments)	Lower (But Potential for Future Increase)
Peripheral Areas	Less Central, Potentially Less Convenient	Varied	Generally Lower

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Is there a strong rental demand in the Diplomatic Quarter?

The rental demand in Diplomatic Quarter is indeed strong, influenced by its unique positioning as a hub for diplomats, international organizations, and affluent locals.

This demand, however, tends to lean more towards long-term rentals, driven primarily by the nature of diplomatic assignments and expatriate contracts which usually span several years.

The target demographic for rental properties in the Diplomatic Quarter is quite specific. It includes diplomats, international business professionals, and high-income Saudi nationals.

These individuals or families often look for properties that offer security, luxury, and a sense of community. Given their international exposure, they usually have high standards and specific requirements for their living spaces.

When it comes to the profiles of potential tenants, diplomats and international professionals often seek properties that are not just comfortable but also representative of their status.

They tend to favor modern, well-maintained apartments or luxury villas that offer amenities like swimming pools, fitness centers, and community halls.

These properties need to be in secure areas, preferably close to international schools, shopping centers, and healthcare facilities, which are essential for expatriate families.

Within the Diplomatic Quarter, areas closer to embassies, international schools like the American International School Riyadh or the British International School, and major commercial hubs are particularly in demand. Properties in these areas are likely to attract a steady stream of long-term tenants.

To reduce vacancy and attract tenants, landlords can focus on providing amenities that cater to the needs of this demographic. Features like high-speed internet, modern home appliances, security services, and facilities for children (like playgrounds and pools) are highly valued.

Properties that offer a blend of comfort, convenience, and security are often more attractive to potential tenants.

In terms of potential returns on investment, properties in the Diplomatic Quarter can be quite lucrative, although specific numbers would depend on the property's size, condition, and exact location.

Nevertheless, given the high demand and affluent tenant base, landlords can expect substantial rental incomes, which can translate into strong yield percentages, especially when compared to other areas in Riyadh.

As for the type of properties gaining more demand and potentially offering better yields, modern apartments and luxury villas with contemporary amenities are increasingly sought after. These properties cater to the evolving tastes and requirements of the expatriate and diplomatic communities, ensuring their long-term appeal.

Additionally, as Riyadh continues to grow as a global city, these types of properties in the Diplomatic Quarter are likely to remain in high demand, offering potentially lucrative opportunities for investors.

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Is it easy to buy a property as foreigner in the Diplomatic Quarter?

Before we answer the question, please know that we have an article dedicated to the experience of buying real estate as a foreigner in Saudi Arabia.

Buying property in the Diplomatic Quarter, Riyadh as a foreigner involves navigating a set of specific regulations and understanding the local real estate market.

While Saudi Arabia has opened up its real estate sector to foreign investors to a certain extent, there are still regulations and restrictions that need to be considered.

Firstly, foreign buyers often face more stringent regulations compared to local buyers. This includes restrictions on the types of properties they can purchase and the areas where they can buy.

For instance, foreign investors are generally allowed to own real estate in Saudi Arabia for residential or investment purposes, but they might need to obtain a license from the Saudi Arabian General Investment Authority (SAGIA).

In the Diplomatic Quarter, which is a high-security area due to the presence of embassies and international organizations, these regulations might be even more specific.

The purchasing process in the Diplomatic Quarter typically involves several steps, including identifying a suitable property, negotiating the price, and going through legal checks and property registration.

One of the primary risks associated with property investment here, as with any international real estate market, is the potential for legal complications, particularly if the buyer is unfamiliar with local laws and regulations.

Moreover, the political and economic stability of the country can also impact the real estate market, potentially affecting property values.

Classic pitfalls for foreign buyers in Saudi Arabia often revolve around a lack of understanding of local practices and legal processes. Unique to the country is the concept of 'Aqar', a form of property ownership specific to Saudi Arabia, which may be unfamiliar to foreign investors. Misunderstandings about property rights, ownership laws, and contract terms can lead to costly mistakes.

Working with a local real estate agent or lawyer is highly important in this context. They can provide invaluable guidance on the local market, help navigate the legal and bureaucratic processes, and ensure compliance with all regulations.

A local expert can also assist in negotiations and provide insights into the most suitable areas and properties, based on the investor’s needs.

Common exit strategies for property investors in the Diplomatic Quarter include selling the property after a period of appreciation or renting it out to generate a steady income stream. Given the area's appeal to diplomats and expatriates, rental properties can be particularly lucrative.

However, it's crucial to stay informed about market conditions and regulatory changes, as these can impact both the rental and resale markets.