Is Riyadh still attractive for buy-to-let investors?

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Why are Riyadh buy-to-let investors more cautious now?

Riyadh buy-to-let is still interesting today, but the market has changed enough that investors can no longer rely on the simple “Riyadh is booming” argument.

The clearest change is transaction activity. Knight Frank counted 67,520 residential transactions in Riyadh in 2024, then only 30,408 in 2025. That was a 55% drop in a single year. The slowdown became even more severe in the first quarter of 2026, when both transaction volumes and transaction values in Riyadh were 82% below the same period a year earlier.

Prices have held up much better. Riyadh apartment values were still 6.3% higher year on year in the first quarter of 2026, while villa values were up 4.9%. Buyers have therefore disappeared much faster than prices have fallen.

That gap makes Riyadh difficult to read currently. Demand for living in the city remains strong, yet many buyers are refusing to transact at today's prices. Affordability has become a real constraint after years of rapid appreciation, expensive mortgages and much larger deposits.

Government policy has also changed direction. Riyadh now has a five-year rent freeze, a White Land Tax that can reach 10%, subsidised residential land through Tawazoun and a huge pipeline of new homes. All four measures should make housing easier to access rather than preserve the extreme scarcity that helped landlords earlier in the cycle.

For buy-to-let investors, the question has become much more specific: can the rent available today justify the price being asked today?

Riyadh residential market	Earlier reading	Latest reading	Change	What we learn
Residential transactions	67,520 in 2024	30,408 in 2025	-55%	Buyers pulled back hard
Q1 transaction volumes	Q1 2025	Q1 2026	-82%	The slowdown became much sharper
Q1 transaction values	Q1 2025	Q1 2026	-82%	Higher-value deals weakened too
Apartment prices	Q1 2025	Q1 2026	+6.3%	Prices remain surprisingly sticky
Villa prices	Q1 2025	Q1 2026	+4.9%	Villas have also resisted the sales slump

Did Riyadh rents rise enough to make buy-to-let investors rich?

Riyadh rents produced exceptional gains for landlords who bought a few years ago, but today's buyer is entering after most of that repricing has already happened.

The scale of the earlier rental boom was huge. JLL reported apartment rents rising 19.6% year on year by the third quarter of 2025, with villa rents up 17.2%. Knight Frank's longer view puts the cumulative increase across much of Riyadh at roughly 30%–40%, with some prime northern districts rising around 50%–60%.

There were good reasons for it. Riyadh became the centre of Saudi job creation, domestic migration accelerated and multinational employers moved more staff into the capital. Knight Frank estimates that around 250,000 Saudis moved to Riyadh from elsewhere in the Kingdom over five years, while the city captured a disproportionate share of the country's newly created jobs.

Anyone who bought before that surge benefited twice: the property cost less and the achievable rent later became much higher.

Today's investor faces a tougher setup. Purchase values already incorporate several years of rapid growth, while Riyadh landlords can no longer keep increasing rent annually. The five-year rental freeze has largely removed that upside from new underwriting.

Riyadh's past rental growth is good evidence that tenant demand became extremely strong. It is a poor reason to assume another 30%–40% increase from here.

Has Riyadh's five-year rent freeze changed buy-to-let completely?

Yes. Riyadh's five-year rent freeze has changed the economics of buy-to-let because the rent written into the lease now matters far more than the rent a landlord hopes to charge later.

REGA's current rules prevent increases in the total rental value of residential and commercial properties within Riyadh's urban boundary for five years. The restriction covers existing leases and new contracts.

Vacant properties with an existing rental history are also affected. According to REGA, their total rent generally cannot exceed the value recorded in the property's last lease. Landlords can challenge that cap in specific cases, such as major structural improvements or where the most recent contract was signed before 2024.

Renewal rules matter too. Existing and future contracts are covered by automatic-renewal provisions, and Riyadh landlords cannot simply refuse renewal because another tenant would pay more. Non-renewal is limited to recognised cases such as non-payment, serious structural problems, personal use by the landlord or a first-degree relative, and other cases accepted by REGA.

Imagine two identical apartments selling for SAR 1 million. One already rents for SAR 65,000 a year and the other for SAR 40,000. Their physical value may look similar, but their value to a landlord currently is very different. The first starts at a 6.5% gross yield; the second starts at 4%, with much less freedom than before to close that gap.

That makes Ejar history one of the first things we would check before buying an occupied Riyadh investment property.

Buy-to-let issue	Earlier market	Riyadh currently	Investor impact
Annual rent increases	Could follow market repricing	Frozen for five years	Less income growth
Below-market tenant	Rent could potentially move upward later	Repricing is heavily restricted	Existing rent becomes crucial
Vacant unit with lease history	New asking rent had more flexibility	Previous Ejar rent generally anchors it	Vacancy may not reset rent
Landlord renewal decision	Greater flexibility	Restricted grounds for non-renewal	Tenant replacement is harder
Investment underwriting	Future rent growth could rescue a weak initial yield	Starting yield carries much more weight	The deal needs to work immediately

Are Riyadh rental yields still good today?

Riyadh rental yields are still good in parts of the apartment market, but the citywide average hides a huge difference between attractive and poor buy-to-let deals.

The latest Global Property Guide dataset puts Riyadh's average apartment gross rental yield at 5.77%. That looks respectable until we break it down by apartment size.

Its one-bedroom sample produces only 3.21% gross. Two-bedroom apartments average 5.39%. Three-bedroom apartments reach 7.23%.

Those figures are based on median asking prices and rents rather than completed investment transactions, so we would not use them as precise valuations for a particular building. The spread is still revealing. A Riyadh investor can move from a yield barely above 3% to more than 7% without leaving the apartment market.

The Saudi national yield trend has also softened. Global Property Guide measured an average gross residential yield of 7.34% in the third quarter of 2025 and 6.84% in its latest dataset. Prices have therefore absorbed some of the benefit created by higher rents.

Three-bedroom apartments stand out most clearly. Riyadh is heavily family-oriented, so the common assumption that the smallest unit automatically provides the best investment yield does not hold across the city.

At today's prices, we would be much more interested in a practical family apartment yielding around 7% than a fashionable one-bedroom unit producing 3%–4%.

Riyadh apartment type	Median asking price in dataset	Median monthly asking rent	Gross yield
1-bedroom	about US$231,800	about US$620	3.21%
2-bedroom	about US$237,100	about US$1,065	5.39%
3-bedroom	about US$239,800	about US$1,445	7.23%
Riyadh apartment average	—	—	5.77%
Saudi residential average	—	—	6.84%

Is a 6% rental yield actually good enough in Riyadh?

A 6% gross rental yield can still make sense for a cash buyer in Riyadh today, although it leaves much less room for mistakes than the headline number suggests.

Gross yield is calculated before service charges, repairs, property management, vacancy, furnishing and other running costs. Global Property Guide estimates that net yields are commonly around 1.5 to 2 percentage points below gross yields in the markets it tracks.

A Riyadh apartment producing 6% gross could therefore end up closer to 4%–4.5% net depending on the building and how actively it needs to be managed.

Transaction costs also punish short holding periods. Saudi Arabia's Real Estate Transaction Tax remains 5% under the current ZATCA rules. Foreign investors can face additional costs under the new non-Saudi ownership framework.

Over ten or fifteen years, those entry and exit costs can be spread across a long period of rental income. Over three years, they take a much bigger bite out of the return.

The rent freeze makes the starting yield more important again. A 6% yield with annual rent increases has room to compound. A 6% yield that may remain close to the same nominal rent for years has less upside.

For us, 6% now sits around the point where a Riyadh property becomes worth investigating rather than an automatic buy. Once the gross yield reaches 6.5%–7% on a solid property, the income case becomes considerably stronger.

Does using a mortgage still work for Riyadh buy-to-let?

Heavy mortgage leverage looks unattractive for many Riyadh buy-to-let deals currently because borrowing costs can exceed the property's gross rental yield.

Published Saudi home-finance examples illustrate the problem. Al Rajhi Bank shows APRs around 6.6%–6.9% across several common financing examples. SAB advertises home financing starting around the high-6% range, while examples from Riyad Bank and Alinma can move into the 7% range.

Actual investment-property financing depends on the buyer, the bank, income, residency status and property, so those advertised rates are not universal buy-to-let quotes. They still show the basic cost of residential debt in Saudi Arabia today.

Suppose we buy a SAR 1 million Riyadh apartment yielding 6% gross. Annual rent is SAR 60,000.

With a SAR 700,000 loan amortised over twenty years at roughly 6.9%, annual debt service would be around SAR 63,000–64,000. Rental income would already be exhausted before service charges, maintenance or vacancy.

A cash buyer gets the full SAR 60,000 gross income. A highly leveraged buyer can have negative cash flow while owning exactly the same property.

Leverage can still work with a much higher rental yield, cheaper financing, a large deposit or a strong capital-growth thesis. For ordinary Riyadh apartments yielding 5%–6%, however, debt currently makes the income proposition noticeably weaker.

Illustrative SAR 1m apartment	Cash buyer	70% financed buyer
Property price	SAR 1,000,000	SAR 1,000,000
Gross yield	6.0%	6.0%
Gross annual rent	SAR 60,000	SAR 60,000
Mortgage	SAR 0	SAR 700,000
Illustrative APR	—	about 6.9%
Approx. annual debt service	SAR 0	about SAR 63,000–64,000
Rent after debt service, before expenses	SAR 60,000	roughly -SAR 3,000 to -4,000

Are Riyadh property prices still rising now?

Riyadh property prices are still rising on the latest market data, but the pace looks increasingly fragile when we compare it with the collapse in sales activity.

Apartment prices had already risen dramatically before the current slowdown. Knight Frank calculated a 75% increase between 2019 and 2024, followed by another 10.6% year-on-year rise by the second quarter of 2025.

The latest reading remains positive. Apartment values increased 6.3% year on year in the first quarter of 2026, while villas gained 4.9%.

We cannot ignore what is happening underneath those prices, though. Riyadh residential transactions fell 55% during 2025. As seen above, first-quarter volumes and values then dropped another 82% year on year.

Owners have not accepted much lower valuations, while a large share of prospective buyers have decided to wait. For now, prices are sticky and liquidity is poor.

Some districts have already shown that Riyadh prices can retreat even when the city average remains positive. Knight Frank was reporting pockets of falling values as early as 2025 while centrally located and Metro-connected districts kept rising.

Riyadh residential prices are still resilient today. Calling the market strongly bullish would go too far when so few buyers are willing to transact.

Could Riyadh property prices actually fall?

Yes. Riyadh property prices can fall from current levels, especially in weaker submarkets, and the government's recent housing policies make that risk more credible.

Affordability is the main pressure. Riyadh apartments rose roughly three-quarters in value between 2019 and 2024 according to Knight Frank, while household incomes did nothing comparable. Higher purchase prices also mean much larger deposits at a time when mortgage financing remains expensive.

The government is now leaning directly against land scarcity. The White Land Tax can reach 10%, up from the previous 2.5% rate, giving owners a much stronger incentive to develop or release idle land.

Tawazoun adds another source of pressure. Serviced residential plots have been offered in Riyadh at a capped SAR 1,500 per square metre. Knight Frank says that the combination of these interventions has already encouraged some buyers to wait for more choice and more competitive pricing.

Then comes supply. Roughly 346,700 Riyadh homes are planned or due for completion between 2026 and 2028 according to Knight Frank.

A city with strong population growth can absorb a lot of housing, so none of this automatically points to a crash. The more realistic risk is uneven repricing: expensive generic apartments, peripheral developments and locations facing a wave of similar new stock have much less protection than genuinely scarce properties.

We would therefore avoid paying a premium today purely because Riyadh land became extremely expensive during the previous boom.

Is Riyadh building too many apartments and houses?

Riyadh is building enough new housing to make oversupply a real local risk, even though a citywide glut still looks too simplistic.

Knight Frank expects around 346,700 homes to be planned or delivered in Riyadh between 2026 and 2028, taking total housing stock to just over 2.9 million units.

That is a very large addition over a short period.

National Housing Company is expanding at the same time. Knight Frank reports that NHC has already delivered more than 52,000 homes across major Saudi projects and plans hundreds of thousands more nationally before 2030.

Some of that construction is exactly what Riyadh needs. The city has been suffering from severe affordability problems, and population growth requires more homes every year.

What changes for landlords is the amount of competition. An existing apartment used to benefit heavily from simple scarcity. These days, tenants increasingly have new buildings, master-planned communities and more locations to choose from.

The supply risk will also vary dramatically by district. A good apartment next to a major employment centre can stay well occupied while another part of Riyadh receives thousands of nearly interchangeable units.

For buy-to-let, analysing the competing pipeline within a few kilometres of the property now matters more than quoting Riyadh's overall population-growth rate.

Can Riyadh's population growth absorb all these new homes?

Riyadh has unusually strong housing demand, but we would not assume that population and job growth can absorb every project at every price.

The demand side is genuinely impressive. Riyadh has attracted large numbers of Saudis from elsewhere in the Kingdom, foreign professionals, government employees and workers connected to new private-sector investment.

The Regional Headquarters programme adds a particularly useful rental-demand engine. Knight Frank reported more than 700 RHQ commitments by mid-2026, while foreign investment licences were still rising by almost 20% year on year.

Riyadh's office market shows that corporate demand remains intense as well. Grade A office occupancy was around 95% in Knight Frank's latest review, with rents still rising. Companies taking expensive office space need employees in the city, and many newly arrived workers rent before they consider buying.

At the same time, Saudi policy keeps pushing households toward ownership. The Kingdom is closing in on its 70% homeownership objective, and government-backed land and residential programmes are designed to make buying easier.

The tenant base should therefore keep growing, particularly among internationally mobile workers and younger households. Strong demand still does not mean infinite demand.

Riyadh can add hundreds of thousands of residents while some badly priced rental projects struggle.

Are Riyadh apartments better buy-to-let investments than villas?

Apartments currently look better than villas for most Riyadh investors who primarily want rental income.

The reason is straightforward: apartments generally require less capital and can produce much better rent relative to their purchase price.

Recent yield data make that especially visible for larger apartments. Global Property Guide's Riyadh sample puts three-bedroom apartments at 7.23% gross, compared with 5.39% for two bedrooms and only 3.21% for one bedroom.

Villas appeal to a deep Saudi family market and provide more direct exposure to land values, which helped owners enormously during Riyadh's previous appreciation cycle. But that land component also makes them expensive. Rent does not always rise enough to keep pace with the purchase price.

Apartments have another advantage these days: Riyadh households are adapting to affordability pressure. Knight Frank has observed a gradual shift in preferences toward apartments as villas become harder to afford.

For someone pursuing long-term land appreciation, a well-located villa can still make sense. For a landlord mainly asking how much rent each SAR 1 million of capital can generate, good two- and three-bedroom apartments currently look easier to defend.

Is northern Riyadh still the best place to buy a rental property?

Northern Riyadh still attracts some of the city's strongest tenants, but paying a huge northern-Riyadh premium can easily ruin the buy-to-let return.

Districts such as Hittin, Al Malqa, Al Yasmin and Al Narjis have benefited from wealthier households, corporate expansion, new development and proximity to important business and entertainment areas.

The Riyadh Metro has strengthened the case for some connected locations. Knight Frank found that the network put roughly 1.5 million residents within walking distance of rapid transit during its first year, and the Metro carried more than 100 million passengers in its first nine months.

Property prices reacted quickly. Knight Frank's analysis found significant premiums around improved Metro access, with being 500 metres closer to a station associated with roughly SAR 96 per square metre of additional apartment value in its model. Some districts had already recorded very large increases before investors could fully price the transport effect themselves.

That creates a problem for late buyers. A location can be excellent while the investment is mediocre because everyone already knows it is excellent.

We would compare the achievable Ejar rent with the actual purchase price district by district. A less glamorous apartment offering 7% near a major employment or transport corridor can be a better landlord asset than a trophy northern unit yielding 4%.

For rental property, tenant convenience deserves more weight than the prestige of the neighbourhood name.

Can foreigners now make money buying Riyadh rental property?

Foreign investors can access Riyadh residential property much more easily now, but the new rules favour patient owners rather than short-term speculators.

Saudi Arabia's new non-Saudi ownership system is already in force. REGA accepts applications through the Saudi Properties platform from qualifying Saudi residents, non-residents, companies and other entities.

Non-residents can begin the process through Saudi diplomatic missions to obtain the digital identity needed for the ownership application. Ownership still depends on geographical rules and the applicable regulatory conditions, so foreign access should not be interpreted as unrestricted ownership of every Riyadh property.

Costs need attention as well. Saudi property transfers remain covered by the 5% Real Estate Transaction Tax framework. REGA's implementing regulation also sets a 2% fee on dispositions of real-estate rights by non-Saudis in Riyadh.

The international demand behind the reform is real. Knight Frank has identified billions of dollars of private foreign capital interested in Saudi real estate, including roughly US$1.5 billion targeting residential purchases in its 2026 survey work.

But foreign investors should be careful with the assumption that opening the market guarantees another surge in Riyadh prices. Many international buyers have finite budgets, while prime Riyadh residential values are already high.

For a foreign landlord, the strongest case is therefore the same one we would use for a Saudi investor: buy a property where the rent already makes sense and give the investment enough time to absorb the transaction costs.

Is Riyadh or Jeddah better for buy-to-let right now?

Jeddah currently beats Riyadh on headline rental yield, while Riyadh still has the stronger long-term employment and economic-growth story.

The latest Global Property Guide dataset puts average apartment gross yields at 5.77% in Riyadh and 7.91% in Jeddah.

A gap of more than two percentage points is substantial. On SAR 1 million of property, two extra percentage points represent roughly SAR 20,000 of additional gross rent per year.

Jeddah's advantage is even more relevant now because Riyadh rents are frozen for five years. A Riyadh investor cannot casually assume today's 5.8% average yield will become 7% through annual rent increases.

Riyadh offers different advantages. It dominates Saudi corporate relocation, captures a large share of new jobs and is receiving enormous infrastructure spending. That gives the capital a stronger structural case for long-term tenant demand and potentially for capital appreciation.

The choice depends heavily on what we are trying to earn. For current rental income, Jeddah deserves serious consideration before committing to Riyadh. For long-term exposure to Saudi Arabia's main business centre, Riyadh remains difficult to replace.

Current comparison	Riyadh	Jeddah
Average apartment gross yield	5.77%	7.91%
Main attraction	Jobs, corporate migration, long-term growth	Higher current income
Rental repricing	Five-year freeze	No equivalent Riyadh-wide freeze
Entry-price pressure	High	Generally lower
Better fit	Long-term selective investor	Yield-focused investor

What does a genuinely good Riyadh buy-to-let deal look like now?

A genuinely good Riyadh buy-to-let deal today probably starts around a 6.5%–7% gross yield, with an existing rent that already supports the investment.

We would want a property that does not depend on an optimistic story.

A two- or three-bedroom apartment can fit that description particularly well when it has parking, sensible service charges, good building management and easy access to employment, schools or the Metro. The exact district matters less than the relationship between purchase price and sustainable registered rent.

Once the gross yield gets above 7%, the rental income provides useful protection if property prices stagnate for several years.

Around 5%, the deal becomes much harder to justify unless the property has something genuinely scarce: an exceptional location, a large purchase discount, unusually low running costs or strong evidence that the asset itself should outperform.

At 3%–4%, we are mostly betting on capital appreciation. That looks aggressive in Riyadh these days given the rent freeze, weak transaction liquidity, affordability interventions and incoming housing supply.

We would also keep leverage modest. Borrowing around 7% to buy a property yielding 5%–6% gross produces poor cash flow from the beginning.

The deals we like now are relatively simple: good family apartments, real tenant demand, manageable expenses, a strong existing rent and a purchase price low enough that nothing spectacular has to happen afterward.

Is Riyadh still attractive for buy-to-let investors?

Yes, selectively. Riyadh is still attractive for buy-to-let investors today, but we would only buy when the existing rental yield is strong enough to justify the property without relying on another boom.

There is plenty to like about the city. Riyadh continues to attract jobs, companies and residents. More than 700 Regional Headquarters commitments have been recorded, Grade A offices remain about 95% occupied, the Metro is already carrying huge numbers of passengers and international investors can now access the Saudi market through a much broader ownership framework.

Rental demand is not the weak point.

The price investors pay for that demand is where the problem starts. Apartments appreciated enormously over the previous cycle, financing remains expensive, transaction volumes have collapsed and landlords have lost much of their ability to raise rents for five years.

Supply is moving in the other direction too. Riyadh has roughly 346,700 homes planned or due between 2026 and 2028. Tawazoun is releasing cheaper serviced land, while the White Land Tax gives owners a stronger reason to develop idle sites.

As pointed out above, prices have remained surprisingly resilient despite the collapse in transactions. We would not assume that resilience lasts forever.

For a cash buyer finding a good two- or three-bedroom apartment around 6.5%–7% gross, Riyadh can still be a very good long-term rental market. The city has enough employment and population growth to support tenants, while the initial yield gives us a return even if property prices spend several years going nowhere.

The case gets much weaker at 4%–5%. Add a mortgage costing roughly 7%, frozen rents and uncertain resale values, and the investment starts depending heavily on future appreciation.

So we would still buy rental property in Riyadh now, but much more selectively than a few years ago. A strong yield deserves attention. A weak yield wrapped in a Riyadh growth story does not.

Fact-checked and reviewed by our local expert

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Abdullah 🇸🇦

Founder of Expat Legal Counsel Saudi

Abdullah is the founder of Expat Legal Counsel Saudi, which supports foreigners in Saudi Arabia with clear legal guidance across employment, commercial, family, criminal, and administrative matters. His experience gives him a practical understanding of Riyadh’s real estate market and the issues expats should keep in mind.

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SANDS OF WEALTH

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