For decades now, the perceived status of the Kingdom as a good investment destination has received global attention. Unfortunately, expats residing in the Kingdom had to only salivate and watch on the sidelines as Saudi citizens made kills in terms of home ownership. An attempt to actuate the Kingdom’s willingness to become a global hub became more apparent with the launch of the Premium Residency Visa that allowed expats to invest and own homes in Saudi Arabia. The year 2024 has confirmed the suspicion that expats were looking to buy properties in the Kingdom with 77% seeking to own homes within 24 months.
Here we delve into the expats’ demand for homeownership in the Kingdom of Saudi Arabia.
Let’s put the demand in its context…
According to the 2022 population census, 13.38 million foreign nationals which is 41.6%. Notably, the number of expats has steadily grown since the Kingdom seeks to retain high-skilled labour to support the growth prospects.
Expat Demand for Homeownership
The launch of the new Premium Residency visa came with a price tag of SAR 4 million. The survey revealed that only 9% of the expats are willing to spend SAR 3.5 million to own a property. Nonetheless, the purchasing budget among the expats shows that 75% are willing to spend less than 1.5 million SAR to purchase a property while 40% are ready to spend more than 750,000 SAR on a property purchase.
The potential demand for apartments in key markets such as Riyadh, Jeddah, and Dammam among expats is estimated to be USD 863 million. With the increase in property prices, the expat demand is important to the overall demand for homeownership in the Kingdom.
Factors Creating a Surge in Demand for Homeownership
Expat demand for homeownership in Saudi Arabia has been evolving due to several factors. Here are some key points to consider:
Economic and Policy Changes
Saudi Arabia’s Vision 2030 initiative aims to diversify the economy away from oil dependency. This includes significant investments in infrastructure and real estate, making homeownership more attractive.
New Regulations
The Saudi government has introduced regulations to facilitate foreign investment in real estate, such as allowing non-Saudis to own properties in certain areas.
Economic Stability
Saudi Arabia’s stable economy, coupled with a growing job market, particularly in sectors like finance, technology, and tourism, is attracting more expatriates.
Expat Demographics
High-income expatriates working in professional sectors are more likely to invest in property due to financial capability and a desire for long-term settlement. Further, Middle-income expats may also be interested in homeownership, especially with favourable mortgage options and government incentives.
Financial Considerations
Banks in Saudi Arabia have started offering mortgage products tailored for expatriates, with competitive interest rates and flexible terms. Additionally, the affordability of housing, especially in major cities like Riyadh and Jeddah, is a critical factor. The availability of various housing options, from luxury villas to affordable apartments, caters to different income levels.
Social and Cultural Factors
High-quality infrastructure, safety, and amenities make Saudi cities attractive for long-term living, encouraging expats to consider homeownership. On the other hand, developments that offer a sense of community, with international schools, healthcare facilities, and social clubs, are particularly appealing to expatriates.
Cities like Riyadh, Jeddah, and the NEOM project are seeing increased interest due to their economic opportunities and modern infrastructure. Therefore, some expatriates view real estate in Saudi Arabia as a lucrative investment opportunity, given the potential for property value appreciation.
In sum…
The demand for homeownership among expatriates in Saudi Arabia is growing, driven by economic policies, improved regulations, and attractive living conditions. However, potential buyers should consider financial, legal, and market factors when making decisions.