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As of June 2025, Saudi Arabia's property market has opened significantly to foreign investors under Vision 2030 reforms. Foreign nationals can now purchase residential property in Riyadh and generate rental income, though specific requirements and restrictions apply.
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Foreign nationals with valid residency can legally purchase property in Riyadh and rent it out for income as of June 2025.
The market offers attractive rental yields of 5-10%, with apartments in business districts achieving the highest returns.
| Aspect | Details |
|---|---|
| Can foreigners buy? | Yes, with Iqama or Premium Residency |
| Property types allowed | Apartments, villas, townhouses (no land for non-residents) |
| Rental yields | 5-10% (apartments higher than villas) |
| Best areas | Al Olaya, KAFD, Al Malqa, Al Yasmin |
| Typical tenants | Expats (40%), locals (35%), corporate (25%) |
| Average 2BR rent | SAR 60,000-200,000/year depending on location |
| Key requirements | Iqama, property registration, Ejar lease registration |
| Transaction tax | 5% paid by buyer |
| Management options | Local agents, international firms, online platforms |
| Marketing platforms | Wasalt, Bayut, Propertyfinder, real estate agents |
Can foreigners legally buy property in Riyadh and generate rental income?
Yes, foreigners can legally purchase property in Riyadh and rent it out for income as of June 2025.
The Saudi government has implemented major reforms under Vision 2030 and the 2025 Investment Law that allow foreign nationals to own residential property, provided they meet specific requirements. These include holding a valid Saudi residency permit (Iqama), obtaining approval from the General Authority of Real Estate, using the property for residential purposes, and complying with location restrictions.
Foreign property owners can legally rent out their properties and collect rental income, making Riyadh's real estate market an attractive investment opportunity for international buyers. The reforms specifically permit Iqama holders to generate income from their properties, and Premium Residency holders have explicit rights to invest in real estate with rental income generation.
It's something we develop in our Saudi Arabia property pack.
The key restriction is that properties cannot be purchased in Mecca, Medina, border areas, or military zones, but Riyadh is fully open to foreign investment.
What types of properties can foreigners buy and rent out?
Foreigners in Riyadh can purchase and lease out apartments in residential towers and compounds, villas and townhouses in designated areas, and furnished units for short or long-term rental.
With an additional Saudi Investment License from MISA, foreigners can also invest in commercial properties. The typical restriction limits foreigners to owning one property with a maximum size of 3,000 square meters, though Premium Residency holders may have more flexibility.
However, foreigners cannot purchase undeveloped land (for non-residents), properties in holy cities (Mecca and Medina), properties near borders or military installations, or agricultural land. These restrictions are designed to protect sensitive areas while still allowing significant investment opportunities in Riyadh's residential market.
The most popular investment options are apartments in business districts and villas in expat-friendly compounds, both of which offer strong rental demand.
Do you need residency or special permits to rent out your property?
Yes, you need valid residency status to both purchase and rent out property in Riyadh.
Standard Iqama holders can buy one property for personal use and rent it out while maintaining valid residency. Premium Residency holders can purchase property with a minimum investment of SAR 4 million and have explicit rights to generate rental income. Non-residents cannot directly own property but can invest through joint ventures with Saudi nationals, Saudi-registered companies, or real estate investment funds.
All rental activities must be registered through the Ejar system, Saudi Arabia's official tenancy contract platform. This registration is mandatory and provides legal protection for both landlords and tenants. The system ensures transparency and helps resolve disputes through official channels.
Without proper residency status and Ejar registration, rental income generation would be considered illegal and could result in penalties or property confiscation.
What rental yields can you expect in Riyadh?
Riyadh offers some of the highest rental yields in the GCC region, with apartments consistently outperforming villas in terms of yield.
As of mid-2025, typical gross rental yields range from 5% to over 11% depending on property type and location:
| Property Type | Average Yield | Prime Location Yield |
|---|---|---|
| 1BR Apartment | 7-8% | 8-9% |
| 2BR Apartment | 9.1% | 10-11% |
| 3BR Apartment | 10.1% | 11-12% |
| Mid-size Villa | 5.3% | 6-7% |
| Furnished Units | 8-10% | 10-12% |
3-bedroom apartments in business districts achieve the highest returns at over 10% annually, making them particularly attractive for investors seeking maximum yield.
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Which Riyadh neighborhoods offer the best rental potential?
The strongest rental demand and lowest vacancy rates, often below 10%, are found in Riyadh's business and expat-friendly districts.
Al Olaya stands out as Riyadh's premier business district with premium apartments and consistent corporate demand. King Abdullah Financial District (KAFD) offers luxury apartments with occupancy rates exceeding 90%. Al Malqa is a family-oriented area popular with expats, experiencing rapid appreciation, while Al Yasmin provides affordable yet modern options attracting young professionals and families.
Other strong performers include Al Narjis, a new development area with strong growth potential; Diriyah, the heritage district ideal for luxury and short-term rentals; and Al Sahafa, an established community with stable long-term rental demand. These areas benefit from proximity to international schools, business centers, and modern amenities that tenants prioritize.
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Properties in these prime locations typically rent within 2-4 weeks and maintain high occupancy throughout the year.
Who rents properties in Riyadh and what do they want?
The Riyadh rental market comprises three main tenant groups with distinct preferences and requirements.
Expats make up 40% of the market and prefer gated compounds with amenities, seek proximity to international schools, want furnished or semi-furnished units, and prioritize security and modern facilities. Local Saudis represent 35% of the market and are increasingly renting modern apartments, preferring newer developments in north Riyadh with family-friendly layouts that value privacy and parking.
Corporate leases account for 25% of the market, with companies renting multiple units for staff housing. They prefer central business district locations, seek flexible lease terms, and require high-spec, furnished properties. Understanding these tenant profiles is crucial for targeting marketing efforts and maximizing occupancy rates.
The trend shows growing demand from young Saudi professionals who prefer apartment living over traditional villas, creating new opportunities for investors in modern residential towers.
What's the typical rental income by property type and area?
Average annual rental income in Riyadh varies significantly by district and property type, with premium locations commanding substantially higher rents.
The most expensive district is KAFD, where 2-bedroom apartments rent for SAR 120,000-200,000 annually, while similar properties in Al Yasmin rent for SAR 60,000-100,000. Al Olaya remains highly sought after with 3-bedroom apartments fetching SAR 120,000-220,000 per year.
| District | 2BR Apartment | 3BR Apartment | Villa |
|---|---|---|---|
| Al Olaya | SAR 100,000-180,000 | SAR 120,000-220,000 | SAR 250,000-400,000 |
| KAFD | SAR 120,000-200,000 | SAR 150,000-250,000 | SAR 300,000+ |
| Al Malqa | SAR 75,000-120,000 | SAR 100,000-150,000 | SAR 200,000-350,000 |
| Al Yasmin | SAR 60,000-100,000 | SAR 90,000-140,000 | SAR 180,000-300,000 |
| Compounds | SAR 120,000+ | SAR 170,000+ | SAR 250,000-400,000 |
Furnished apartments command a 10-20% premium over unfurnished units, while short-term rentals through platforms like Airbnb average SAR 313 per night with 40% occupancy, generating SAR 40,000-60,000 annually for standard units.
What are your legal obligations as a foreign landlord?
Foreign property owners must comply with several legal requirements to operate legally in Saudi Arabia's rental market.
All rental agreements must be registered through the Ejar platform, and landlords must use government-approved tenancy agreement templates. Foreign landlords are required to declare rental income and pay applicable taxes, with rates varying by residency status. Property owners are responsible for major repairs and ensuring habitability, as well as paying annual municipality fees and property service charges.
Safety compliance is crucial - properties must meet all safety and building standards set by local authorities. Landlords must respect tenant privacy rights and follow proper eviction procedures as outlined in Saudi law. Failure to comply with these regulations can result in fines, legal disputes, or loss of rental income rights.
Regular property inspections and maintenance records should be kept to demonstrate compliance with legal obligations.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Saudi Arabia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How do rental agreements work in Riyadh?
Rental agreements in Riyadh follow a structured format with standardized terms that protect both landlords and tenants.
Standard lease terms typically run for 12 months and are renewable, with payment schedules usually requiring annual or semi-annual payment upfront. Security deposits range from 1-3 months' rent and are refundable at the end of the tenancy. Notice periods for termination are typically 60-90 days, and rent increases are limited to 5-10% annually by law.
Contracts must be in Arabic (though English translations are acceptable) and registered on the Ejar platform for legal validity. They should include clear termination clauses, specify maintenance responsibilities, and detail included utilities and services. The Ejar system provides standardized contract templates that ensure all legal requirements are met.
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Both parties receive digital copies of the registered contract, which serves as legal proof of the tenancy agreement.
What property management options exist for overseas landlords?
Foreign landlords not residing in Saudi Arabia have several management options to handle their properties remotely.
International property management firms like JLL, Savills, Knight Frank, and CBRE offer full-service management including tenant sourcing for typical fees of 8-10% of annual rent. They handle legal compliance, maintenance, and provide professional reporting. Local real estate agencies offer lower fees (5-8% of annual rent) with strong local market knowledge, Arabic language support, and personal relationships with tenants.
Online management platforms provide remote property monitoring, digital rent collection, maintenance coordination, and virtual tenant screening. Many foreign landlords also appoint a local representative through power of attorney to handle legal matters, make emergency decisions, and provide court representation if needed.
The choice depends on your budget, level of involvement desired, and complexity of your property portfolio.
What taxes and fees apply to foreign landlords?
Foreign property owners face several financial obligations when investing in Riyadh real estate.
The real estate transaction tax of 5% of the purchase price is paid at the time of purchase. Annual municipality fees range from 0.5-1% of property value, while rental income tax varies by residency status. Property management fees typically cost 5-10% of rental income if using professional services.
Additional costs include Ejar registration fees of SAR 100-200 per contract, a maintenance reserve of 5-10% of rental income for ongoing repairs, and insurance costing 0.25-0.5% of property value annually. When selling the property, capital gains tax of 20-30% applies depending on ownership structure.
These costs should be factored into investment calculations to determine net rental yields and overall returns.
How do you find tenants and market your property?
The Riyadh rental market offers multiple channels for finding tenants, with online platforms being the most effective.
Key online platforms include Wasalt (Saudi's official real estate platform), Bayut Saudi (leading property portal), Propertyfinder.sa (popular with expats), Expatriates.com (expat-focused listings), and Facebook Groups like "Riyadh Expats Housing". These platforms reach the widest audience and allow for detailed property listings with photos and virtual tours.
Traditional methods remain effective, including real estate agents who charge 2.5-5% commission, company HR departments for corporate leases, compound management offices, word-of-mouth in expat communities, and property signs in Arabic and English. Professional photography is essential, and listings should highlight proximity to schools and offices, emphasize security features, offer virtual tours for overseas tenants, and maintain quick response times (within 24 hours).
Prime properties in good locations typically rent within 2-4 weeks, with occupancy rates exceeding 90% in top districts.
Conclusion
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.
Riyadh's real estate market offers compelling opportunities for foreign investors, with clear legal frameworks and attractive rental yields exceeding 10% in prime locations.
Success requires understanding local regulations, choosing the right property type and location, and establishing proper management systems to maximize returns while ensuring compliance with Saudi laws.
Sources
- Crown Continental - Comprehensive Guide for Foreigners Buying Property in Saudi Arabia
- Real Estate Saudi - Step-by-Step Guide for Foreigners Buying Real Estate in Riyadh
- Company Formation Saudi Arabia - Buying Property in Saudi Arabia
- Global Property Guide - Saudi Arabia Rental Yields
- Zawya - Saudi Arabia Leads in Apartment Rental Yields in Gulf Region
- Bayut Saudi Arabia - Properties for Rent in Riyadh
- Wasalt - Properties for Rent in Riyadh
-Saudi Arabia Real Estate Market Overview
-Jeddah Real Estate Market Analysis
-Dammam Real Estate Market Trends
-Riyadh Real Estate Market Insights
-Can Non-Saudis Own Property in Saudi Arabia?
-New Real Estate Laws for Foreigners in Saudi Arabia
-Property Restrictions in Medina and Mecca for Foreigners
-Can Foreigners Now Own Property in Saudi Arabia?
-Are Jeddah Property Prices Going Up?
-How to Buy a House in Saudi Arabia
-Understanding RETT Law in Saudi Arabia
-Saudi Arabia's New Investment Law Explained