Authored by the expert who managed and guided the team behind the Saudi Arabia Property Pack
Everything you need to know before buying real estate is included in our Saudi Arabia Property Pack
Are you considering investing in Saudi Arabia’s real estate market? What are the legal steps, tax implications, and cultural differences you need to understand before taking the plunge? What challenges do foreign investors typically face, and how can you overcome them?
These are the questions we hear most often from foreign investors because we’re actively connected to this market. We’ve spent time working with local agents, developers, and investors, so we know what works—and what doesn’t. That’s why we’ve written this article: to provide a clear guide that answers the questions we get asked daily.
Our goal is to help you, as a foreigner, to navigate the property buying process with confidence. If you think there’s something we missed or want more details, let us know (please do!). Your input helps us refine and improve our advice for everyone.
How this content was created 🔎📝
1) Partner with a local real estate agent to navigate market nuances and legal requirements for an edge
Partnering with a local real estate agent in Saudi Arabia can give you a significant advantage.
The Saudi real estate market is booming, with expectations to reach USD 11.31 billion by 2029. This growth is fueled by major projects like Neom and The Line, which are set to drive demand for 300,000 new homes by 2025. Local agents are crucial in these areas, helping buyers navigate the complexities of purchasing pre-construction properties.
Understanding the legal landscape is another area where local agents shine. The introduction of the Real Estate Brokerage Law and the establishment of the Real Estate General Authority have created a complex legal environment. Local agents are well-equipped to handle these intricacies, ensuring a smoother transaction process for foreign buyers.
Language and cultural barriers can be a challenge, but local agents help bridge this gap. They ensure that foreign buyers can effectively communicate and understand the market nuances and legal requirements. This is invaluable for anyone unfamiliar with the local customs and language.
Local agents also provide access to exclusive listings and have the skills to negotiate better property prices. Their deep understanding of the market allows them to secure favorable deals for their clients, making them an indispensable part of the buying process.
By partnering with a local agent, you gain an edge in a competitive market, benefiting from their insider knowledge and expertise. They can navigate the legal requirements and help you make informed decisions, ensuring a successful property purchase.
Sources: Mordor Intelligence, The National News
2) Avoid properties with unclear ownership or title issues, as they can complicate purchases and lead to disputes
When buying property in Saudi Arabia, be wary of unclear ownership or title issues.
Historically, Saudi Arabia's property ownership relied on handwritten title deeds, which often led to fragmented ownership and legal disputes. This system has been a source of headaches for many, as these handwritten records can be incomplete or outdated, complicating the buying process.
In 2023, the real estate market in Saudi Arabia experienced a 17% drop in transactions, largely due to title issues. Even with a market boom in 2024, these verification problems remained a significant hurdle for buyers. It's a common scenario where potential buyers find themselves entangled in disputes over property titles.
Foreign buyers face unique challenges, particularly with the "tanazul" system. Here, the property's title deed stays under a Saudi national's name, which can limit legal recourse and lead to disputes. This system can be a maze for those unfamiliar with local practices.
Real estate professionals often stress the importance of thoroughly investigating a property's title deed and zoning regulations. This due diligence is crucial to avoid potential pitfalls and ensure a smooth transaction. It's not just about finding the right property; it's about ensuring the paperwork is in order.
Being informed and cautious can save you from future headaches. Always double-check the title records and consult with local experts to navigate the complexities of the Saudi real estate market.
Sources: Al Tamimi & Company, Consultancy ME
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.
3) Consider investing in short-term rental properties in Saudi Arabia, as government efforts to boost tourism may increase demand in key areas
Saudi Arabia is experiencing a tourism boom with millions of international visitors flocking to the country.
In 2023, Saudi Arabia welcomed 109 million visitors, with 27 million being international tourists, marking a 56% increase from 2019. This surge is part of the country's Vision 2030 initiative, which aims to transform the tourism sector with nearly $1 trillion in investments to develop new destinations and improve infrastructure.
The introduction of tourist visas has made it easier for international visitors to explore Saudi Arabia, significantly contributing to the rise in tourist numbers. This move is part of the government's strategy to make the country a more attractive destination.
With the influx of tourists, there's a growing demand for Airbnb and short-term rental properties, especially in major cities like Riyadh and Jeddah. Tourists are increasingly seeking accommodation options that offer flexibility and convenience.
As the Saudi government continues to promote tourism, the demand for short-term rental properties is expected to rise, particularly in key locations. This trend presents a lucrative opportunity for property investors looking to capitalize on the booming tourism sector.
Sources: Moodie Davitt Report, Hospitality Investor, Skift
4) Focus on expatriate-friendly areas in Saudi Arabia for a strong rental market and steady income stream
Buying property in Saudi Arabia can be a smart move, especially in areas popular with expatriates.
In 2023 and 2024, major cities like Riyadh and Jeddah experienced high occupancy rates, showing strong demand for rentals. This is largely due to the influx of expatriates, driven by Saudi Arabia's economic diversification efforts. The country's population is expected to grow by 3.3% from 2024 to 2027, further fueling this demand.
Real estate agencies such as JLL and Knight Frank have noted a 9% increase in rental yields in Riyadh and a 4% increase in Jeddah during the first half of 2024. This suggests that investing in rental properties here could offer a reliable income stream. The Saudi Vision 2030 initiative is also working to attract foreign investment, which is boosting the real estate sector.
Infrastructure improvements in expatriate-friendly areas are making them more appealing, with better living conditions and amenities. This, combined with the growth of international companies setting up offices in Saudi Arabia, is driving up demand for expatriate housing. As a result, the rental market remains robust, providing consistent rental income opportunities for property owners.
Sources: Economy Saudi Arabia, S&P Global
5) Be aware that cash transactions remain common in Saudi real estate, despite increasing access to bank financing
You might be surprised to learn that cash transactions are still common in the Saudi real estate market, although bank financing is becoming more accessible.
In 2023, the Saudi real estate market saw a 17% drop in overall transaction volumes, but the total value of deals only fell by 9%. This suggests that cash transactions still play a significant role. In Riyadh, for instance, the total value of residential transactions actually rose by 1%, indicating that a substantial portion of these were likely conducted in cash.
Real estate agencies like Knight Frank have observed that Riyadh's residential market has experienced phenomenal price growth, leading to affordability issues. Despite rising borrowing costs, many buyers still prefer cash transactions. This is due to cultural preferences and concerns about future interest rates. Surveys show that while some buyers appreciate the accessibility of financing, many, especially younger individuals, lean towards cash to avoid higher future costs.
Even with more mortgage options available, such as those from the Real Estate Development Fund, the number of mortgages issued fell by 35% in 2023. This decline is largely due to higher interest rates, which push potential buyers to save more before purchasing. Additionally, cultural preferences for owning property outright contribute to the prevalence of cash transactions, as many Saudis prefer to avoid the complexities and costs associated with financing.
In Saudi Arabia, the trend of cash transactions is not just about avoiding interest rates. It's also about maintaining financial independence and control. Many Saudis see owning property outright as a status symbol and a way to secure their financial future without the burden of debt.
While bank financing is becoming more accessible, the cultural inclination towards cash transactions remains strong. This is especially true in regions like Riyadh, where property values continue to rise, making cash transactions a practical choice for those who can afford it.
Sources: Knight Frank Report, Saudipedia Article, Arab News Article
Get fresh and reliable information about the market in Saudi Arabia
Don't base significant investment decisions on outdated data. Get updated and accurate information with our guide.
6) Consider the impact of Vision 2030 on Saudi real estate, as government initiatives heavily influence the market
You might find it surprising that the Saudi real estate market is heavily influenced by government initiatives like Vision 2030, which aims to diversify the economy and increase homeownership.
Vision 2030 is not just a plan; it's a transformative blueprint for Saudi Arabia's future. The government has set an ambitious target of reaching a 70% homeownership rate by 2030. As of late 2023, the homeownership rate was already at 63.7%, showing significant progress. This is a big deal because it means more Saudis are getting the chance to own their homes, thanks to these initiatives.
To support this growth, the government has rolled out several programs. The Sakani program and the Real Estate Development Fund are key players, offering interest-free mortgages and mortgage guarantees. These programs make it easier for locals to buy homes, which is a huge boost for the market. Plus, the government has announced infrastructure and real estate projects worth about $1 trillion, opening up new opportunities for investors and developers.
The real estate sector is buzzing with activity. In the first half of 2024, there was a 38% increase in real estate transactions across all asset classes. The total value of these transactions jumped by 50% to SAR127.3 billion. This surge is a clear sign of the market's growth and the positive impact of Vision 2030 on the economy.
For those considering buying property in Saudi Arabia, this is an exciting time. The government's focus on infrastructure and real estate development is creating a dynamic market. With the backing of Vision 2030, the real estate sector is poised for continued growth, offering plenty of opportunities for both local and international investors.
As the market evolves, it's important to stay informed about these changes. The government's initiatives are reshaping the landscape, making it a promising time to invest in Saudi real estate. Whether you're looking to buy a home or invest in property, the current trends suggest a bright future for the market.
Sources: S&P Global, Global Business Outlook, CEIC Data
7) Invest in Riyadh and Jeddah properties, as infrastructure projects are driving up real estate values in these rapidly developing cities
Investing in property in Riyadh and Jeddah is a smart way to maximize profits.
In Riyadh, property prices are climbing, with villa sales up by 5% and apartment sales increasing by 8% in 2023. This upward trend is expected to continue, making it a promising opportunity for investors. The city's transformation is largely due to the Riyadh Metro project, which has significantly improved infrastructure, attracting more residents and investors.
Jeddah is also seeing a surge in property demand, thanks to the Jeddah Tower, one of the world's tallest buildings. This iconic structure has boosted interest in both commercial and residential properties, driving up values. The city's appeal is growing, making it a hot spot for real estate investment.
The Saudi government's Vision 2030 initiative is a game-changer for the real estate sector. With substantial investments in infrastructure, tourism, and technology, the initiative is creating a boom in demand for residential, commercial, and industrial properties. Mega-projects and urban developments are reshaping the landscape, offering lucrative opportunities for investors.
Riyadh and Jeddah are expanding their business districts and commercial hubs, providing excellent prospects for real estate investment. The ongoing development in these cities is not just about buildings; it's about creating vibrant communities that attract businesses and residents alike.
As these cities continue to grow, the potential for profit in real estate is immense. The combination of government initiatives, infrastructure projects, and urban development is setting the stage for a thriving property market.
Sources: Global Business Outlook, World Estate Homes, Somi Finance
8) Consider cultural factors like mosque proximity and gender-segregated facilities, as they greatly influence property desirability and value in Saudi Arabia
In Saudi Arabia, cultural factors like proximity to mosques and gender-segregated facilities greatly influence property value and desirability.
Living near a mosque, especially in cities like Makkah, is highly sought after. Properties close to mosques can see a significant boost in prices because many people appreciate the convenience and prestige of being near a place of worship. This is particularly true in areas like Shamiya and Shubaika, where the proximity to the Grand Mosque has made real estate prices soar.
In 2023 and 2024, the demand for properties near mosques was especially high among devout Muslim families. This trend underscores how deeply cultural and religious practices are woven into the fabric of the real estate market. The allure of being close to a mosque is not just about convenience; it's about being part of a community that shares similar values and practices.
Gender-segregated facilities also play a crucial role in property values. Despite some social reforms, many residential developments still emphasize gender segregation. In Riyadh, for instance, areas with well-established gender-segregated amenities tend to have higher property values. This is because these features cater to cultural norms that are still very much a part of daily life.
Real estate developers are keenly aware of these preferences. They often market properties with features like separate entrances for men and women, highlighting the importance of adhering to cultural expectations. This approach not only respects tradition but also taps into a market that values these distinctions.
Understanding these cultural nuances can be a game-changer for anyone looking to invest in Saudi real estate. Properties that align with cultural and religious values are more likely to retain their value and attract buyers. This insider knowledge can provide a significant advantage in a competitive market.
Sources: Arab News, KSU, The New Arab
We have made this infographic to give you a quick and clear snapshot of the property market in Saudi Arabia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Consider smart home technology in Saudi Arabia to boost your property's appeal and value
Smart home technology is becoming a big deal in Saudi Arabia.
In the coming years, the Smart Home market in Saudi Arabia is set to grow by 10.37% annually from 2024 to 2029, reaching a whopping US$914.9 million by 2029. This surge shows that more and more people are getting interested in smart home gadgets. Even though less than 10% of homes currently use these devices, the buzz is undeniable. Many Saudi homebuyers are keen on smart home features because they offer convenience, security, and energy efficiency.
Interestingly, a significant number of buyers are ready to spend extra for these modern conveniences. In fact, 70% of homebuyers in Saudi Arabia are actively seeking smart homes. This trend is not just about personal preference; it's also about the future. The Saudi 2030 vision, which includes ambitious projects like NEOM, is pushing for smart city developments. These initiatives are expected to further boost the demand for smart home solutions.
Moreover, tech companies and real estate developers are teaming up to make smart technology a standard in new housing projects. This collaboration is making it easier for homebuyers to access these features, enhancing the overall appeal of properties. As these partnerships grow, the integration of smart devices into homes is becoming more seamless, offering a modern living experience that aligns with the country's vision for the future.
For those considering buying property in Saudi Arabia, this trend is worth noting. Investing in a smart home not only adds value but also aligns with the country's forward-thinking initiatives. As the market continues to expand, properties equipped with smart technology are likely to stand out, offering a competitive edge in the real estate market.
Sources: Statista, Ken Research, Exploding Topics, Mordor Intelligence
10) Be aware of Saudi Arabia's white land tax, as it impacts land availability and pricing
In Saudi Arabia, the government has introduced a white land tax to encourage the development of unused urban land.
This tax, which ranges from 2.5% to 10% of the land's estimated value, depends on factors like location and population density. The idea is to target undeveloped land in urban areas, where a lot of city land was just sitting idle. By imposing this tax, the government hopes to push landowners to develop their properties, making more land available for housing and other uses.
Real estate experts believe this tax could have a significant impact on the market. It encourages the development of previously unused land, which could lead to more land being available and potentially lower land prices over time. This is particularly important in cities where housing demand is high, and available land is scarce.
For potential property buyers, this means there might be more options in the near future. As more land becomes available, it could lead to a wider range of properties to choose from, possibly at more competitive prices. This could be a game-changer for those looking to invest in Saudi real estate.
Insiders suggest that this move is part of a broader strategy to boost urban development and make cities more livable. By encouraging landowners to develop their properties, the government aims to create more vibrant urban areas with better infrastructure and amenities.
So, if you're considering buying property in Saudi Arabia, keep an eye on how this tax might reshape the real estate landscape. It could open up new opportunities for investment and development in the coming years.
11) Ensure all property transactions are documented and registered with authorities to protect your investment
Documenting and registering property transactions is essential to safeguard your investment.
Back in 2024, Saudi Arabia saw some major property fraud cases. For instance, a citizen was caught impersonating others to illegally acquire properties, defrauding a victim of SR69 million. This case underscores the dangers of unregistered transactions.
The Saudi government is serious about protecting real estate assets. They've rolled out guidelines and advisories to help prevent financial fraud and illegal dealings, emphasizing the need for proper registration.
Programs like Sakani and Wafi have been instrumental in promoting homeownership across the country. These initiatives highlight how proper documentation can lead to successful property investments.
In Saudi Arabia, the real estate market is booming, but it's crucial to ensure all transactions are above board. The government’s push for registration is not just a formality; it's a way to secure your assets and avoid potential pitfalls.
By following these guidelines, you can navigate the property market with confidence, knowing that your investment is protected from fraud and other risks. Remember, registering your property is not just a legal requirement; it's a smart move for any investor.
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.