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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 offers, today, a stable business environment
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.
Good news for you, Saudi Arabia is a stable country. The last Fragile State Index reported for this country is 63.2, which is a solid number.
Saudi Arabia offers a stable business environment today due to its Vision 2030 initiative, which aims to diversify the economy away from oil dependency by investing in sectors like tourism, entertainment, and technology, thereby creating a more resilient economic structure. Additionally, the country has implemented regulatory reforms to improve ease of doing business, such as enhancing legal frameworks and infrastructure, which attract foreign investment and foster a more predictable business climate.
Moving forward, let's analyze the economic forecast.
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 2024, grow by 2.6%, which indicates the country is heaidng in the right direction. Regarding 2025, we're talking 6%.
Besides that, the economy will keep growing since Saudi Arabia's economy is expected to increase by 18% during the next 5 years, resulting in an average GDP growth rate of 3.6%.
The expected sustainable growth rate in Saudi Arabia indicates a stable and expanding economy, which can lead to increased demand for real estate as more businesses and people move to the area. This growth can drive property values up, offering potential investors the opportunity for good returns on their real estate investments.
On top of that, there are other indicators to pay attention to.
Property prices in Saudi Arabia won’t move
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.
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 2025.
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 expected to be minimal
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 1.0%, which gives us an average yearly increase of 0.2%.
This data is telling us that Saudi Arabia will likely experience almost no inflation. If you buy a property now, you may experience lower appreciation potential and reduced returns on investment.
Foreign ownership will be improved in Saudi Arabia
Positive
New Investment Law
In August 2024, Saudi Arabia introduced a new Investment Law effective February 2025, overhauling regulations for both foreign and domestic investors. Key changes include:
- Unified Framework: The law applies equally to local and foreign investors, replacing the older Foreign Investment Law.
- Expanded Investment Areas: Previously restricted zones, like King Abdullah Economic City and NEOM, are now open to foreign investment.
- Simplified Procedures: Streamlined processes replace complex licensing, making investment more accessible.
- Investor Rights: Stronger protection for property and intellectual rights.
Real Estate Ownership in Makkah and Madinah
Starting February 2024, foreign investors can invest in companies owning real estate in the previously restricted holy cities of Makkah and Madinah.
Premium Residency Scheme
Saudi Arabia’s premium residency program attracts foreign talent and investment, offering:
- Real Estate Owner Residency: For foreign property owners in Saudi Arabia.
- Investor Residency: For international investors in the Saudi market.
Admitted Zones for Foreign Ownership
Foreigners can now purchase real estate in key areas like:
- Economic cities, including King Abdullah Economic City and NEOM
- Major cities like Riyadh, Jeddah, and Dammam
However, military zones, border areas, and parts of Makkah and Madinah remain restricted, with only rental options available.
Legal Residency Requirement
To buy property, foreign buyers must hold legal residency, such as privileged or investor residency.
These changes, part of Saudi Arabia’s Vision 2030, are set to diversify the economy and open up the real estate market to international buyers, potentially driving increased investment and growth in the sector.
Is it a good time to buy real estate in Saudi Arabia then?
Let's wrap things up!
2025 is shaping up to be an excellent time to invest in property in Saudi Arabia, thanks to its stable business environment. The country has been working hard to create a welcoming atmosphere for businesses, which in turn attracts more people and companies to the area. This stability is a key factor for anyone looking to invest in real estate, as it reduces the risks associated with economic fluctuations and provides a solid foundation for property values to grow.
Moreover, Saudi Arabia's economy is on a promising trajectory, with an expected growth of 18% over the next five years, translating to an average GDP growth rate of 3.6%. This sustainable growth indicates a robust and expanding economy, which is likely to increase demand for real estate. As more businesses and individuals move to the region, property values are expected to rise, offering investors the potential for significant returns on their investments.
Interestingly, while the economy is growing, property prices in Saudi Arabia are not expected to skyrocket. This presents a unique opportunity for investors to enter the market at a relatively stable price point, with the potential for appreciation as the economy continues to expand. Additionally, the population is gradually becoming wealthier, which could further drive demand for real estate, making it a smart move to invest now before prices potentially increase.
Another attractive aspect of investing in Saudi Arabian real estate is the rental yields. According to Numbeo, rental properties in the country offer gross rental yields ranging from 5.6% to 8.3%. This is quite appealing for investors looking for steady income streams. Coupled with minimal expected inflation, these factors make 2025 an opportune time to consider purchasing property in Saudi Arabia, as it promises both stability and growth potential.
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.
-Will real estate prices go up in Saudi Arabia?
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.