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Everything you need to know is included in our Saudi Arabia Property Pack
Are you considering buying real estate in the land of Desert Treasures? Are you curious if the prices are at an optimal point?
When it comes to market timing, there are varying opinions. The Saudi real estate agent you consulted might advise you that now is the opportune time to buy property, while your relative who actually resides in Riyadh may suggest waiting for more favorable market conditions.
At SandsOfWealth, when we create articles or update our pack of documents related to the real estate market in Saudi Arabia, we make decisions based on evidence and trustworthy data rather than subjective opinions or hearsay.
We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Saudi Arabia.
We hope you'll find practical value in this article.
How is the property market in Saudi Arabia now?
Saudi Arabia is, today, a relatively stable country
Neutral
If you want to invest in properties, prioritize stability as it fosters long-term growth and profitability. It is an information you need as a foreigner looking to buy a property in Saudi Arabia.
In recent times, Saudi Arabia has achieved a certain level of stability. The last Fragile State Index reported for this country is 67.5, which is a decent score.
Saudi Arabia has been able to maintain its stability by investing heavily in its security and defense forces, as well as by utilizing its vast oil reserves to fund economic development and social welfare programs. Additionally, its authoritarian government has been able to effectively control dissent and maintain order within the country.
Now, let's examine additional data to determine if it's the right time to invest in property in this country.
Saudi Arabia is poised for strong growth
Positive
Before buying real estate, assess the economic situation of the country.
According to the IMF, Saudi Arabia will, in 2023, grow by 3.1%, which indicates the country is heaidng in the right direction. For 2024, we're talking 3.2%.
Besides that, the economy will keep growing since Saudi Arabia's economy is expected to increase by 13.8% during the next 5 years, resulting in an average GDP growth rate of 2.8%.
The expected sustainable growth rate in Saudi Arabia is a good thing for someone who wants to invest in real estate in this country because it indicates a stable and growing economic environment that will likely result in increased demand for housing and higher property values over time. This provides investors with the potential for significant returns on their investments.
On top of that, there are other indicators to pay attention to.
Property prices in Saudi Arabia won’t move (or will they?)
Neutral
Saudi Arabia's home prices have decreased by -2.0% in 5 years according to Central Department of Statistics and Information.
It means that if you had bought a luxury apartment in Riyadh for $750,000 five years ago, then it would now be worth around $735,000.
Stability persists as property prices maintain a strong and steady trend. It was true 5 years ago, it's still true today in the Kingdom of Saudi Arabia.
Actually, the ongoing trend in Saudi Arabia's real estate market does not guarantee that an investment will not appreciate. The fact that prices have been stagnant in the past does not necessarily mean they won't move in the future.
However, this is just a data and this does not echo with what our local experts tell us.
In Saudi Arabia, high property prices in major cities like Riyadh and Jeddah are a common complaint among residents.
These high prices are attributed to a small group controlling the real estate market and the centralization of activities in Riyadh, making it an attractive place to live.
Demand for homes in Saudi Arabia has increased due to government initiatives, such as the construction of 500,000 homes and housing aid programs. Vision 2030 aims for 75% home ownership for Saudi nationals, with substantial funds allocated to real estate projects, exceeding the country's GDP.
The presence of 15 mega-projects, including NEOM, is set to further drive demand and increase property prices, particularly in suburban areas like Oxagon, Sindalah, Trojena, and The Line, as they strive to offer luxury living standards.
You can find a more detailed analysis of the real estate prices in our property pack for Saudi Arabia.
Everything you need to know is included in our Saudi Arabia Property Pack
Saudi Arabia's population is getting (a bit) richer
Positive
When planning to purchase real estate, it's essential to take into account population growth and GDP per capita because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Saudi Arabia, the average GDP per capita has changed by 4.8% over the last 5 years. The growth, although minimal, is still present.
This means that, if you purchase a luxurious villa in Riyadh and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be an increase in rental demand in Saudi Arabian cities like Riyadh, Jeddah, or Dammam in 2024.
Rental yields are really attractive in Saudi Arabia
Positive
If you're looking for a profitable property investment, pay attention to the expected rental yields.
Rental yield is the percentage of the property's value that you can expect to earn in rental income each year.
According to Numbeo, rental properties in Saudi Arabia offer gross rental yields ranging from 5.6% and 8.3%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Saudi Arabia.
Yields like these are rare to come by.
Everything you need to know is included in our Saudi Arabia Property Pack
In Saudi Arabia, inflation is projected to remain moderate
Neutral
Simply put, inflation is the decrease in the value of money.
It's when your go-to falafel sandwich in Riyadh costs 10 Saudi riyals instead of 8 Saudi riyals a couple of years ago.
If you're contemplating investing in a property, high inflation can bring you several benefits:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby boosting cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
As indicated by IMF projections, over the next 5 years, Saudi Arabia will have an inflation rate of 10.5%, which gives us an average yearly increase of 2.1%.
This data is telling us that Saudi Arabia might experience inflation soon, so it's worth thinking about buying property now.
Foreign ownership will be improved in Saudi Arabia
Positive
Great news for foreigners interested in buying property in Saudi Arabia! In line with its economic diversification strategy, Saudi Arabia is currently in the process of formulating fresh property ownership regulations that will allow non-Saudi citizens to own even more properties.
This announcement, which was made by Abdullah Alhammad, the Head of the Real Estate General Authority (REGA), in March 2023, is generating excitement. While the precise details of the new regulations are still being finalized, authorities have indicated that they are in the final stages of development and will soon be made public.
Naturally, we will keep you updated as soon as these new laws come into effect, and we will make every effort to provide a clear explanation to all our customers who have purchased the Saudi Arabia Property Pack.
This is outstanding news for foreigners, as the new regulations are expected to offer a more comprehensive and inclusive framework compared to the existing property ownership system.
Previously, the law had restricted foreigners from acquiring properties in holy cities, but the preliminary interpretation suggests that the new regulations will grant foreigners the right to own property anywhere in the Kingdom, including Makkah and Madinah.
Furthermore, these properties can encompass various types, such as commercial, residential, and agricultural real estate.
Is it a good time to buy real estate in Saudi Arabia then?
Let's wrap things up!
2024 presents a promising opportunity for property investment in Saudi Arabia, driven by a set of favorable signals that suggest a conducive environment for real estate ventures. Saudi Arabia's projection for strong growth bodes well for property investors. Economic expansion often correlates with increased demand for housing and properties, potentially leading to capital appreciation over time.
The improving financial status of Saudi Arabia's population adds to the attractiveness of property investment. As the population's prosperity grows, the demand for housing and real estate is likely to increase, creating opportunities for both capital appreciation and potential rental income.
One of the standout factors is the really attractive rental yields in Saudi Arabia. These high rental yields indicate the potential for substantial returns on investment through rental income, making real estate a compelling option for those seeking consistent and lucrative returns.
While property prices might not exhibit significant movements and inflation is projected to remain moderate, the overall combination of stable country conditions, attractive rental yields, and the potential for long-term value appreciation make 2024 a favorable year to explore property investment opportunities in Saudi Arabia.
We sincerely hope this article has provided you with beneficial information!. If you need to know more, you can check our our pack of documents related to the real estate market in Saudi Arabia.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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