Not so long ago, there was an opinion that Saudi Arabia is quite closed to foreign investors, but recently the situation has begun to change radically. The Saudis are interested in attracting foreign capital and are trying to provide comfortable conditions for those who are ready to invest in the development of the kingdom.
How does Saudi Arabia compare favorably with the more “hyped” countries of the Persian Gulf? What support measures are provided for foreigners and what restrictions still exist? What kind of housing can residents of different countries (including Russians) buy in Saudi Arabia and on what terms? Danis Latypov, the founder of the Floors real estate agency in Dubai, told us about all this.
Saudi Arabia is going through a construction and cultural revolution.
Grandiose projects and attracting foreigners
— Today Saudi Arabia is going through a real construction and cultural revolution. The country is becoming more and more open to foreigners, both in terms of tourism and business development and investment, and is actively implementing, without exaggeration, some of the most ambitious facilities in the world.
What the NEOM project is worth is a futuristic city with cleaning robots, underground transport highways and a giant mirrored “lying” skyscraper that stretches for tens of kilometers from the Red Sea coast to the desert. In addition, the country plans to create its own island beach complex like the Maldives and a high-tech ski resort.
And most importantly, all these projects are not fantasies and dreams: construction is already underway. The combination of oriental flavor and technologies of the future is about modern Saudi Arabia.
The government plans to “jump off the oil needle” by 2030 and take a leading position in the Middle East. To implement this, foreign financial injections are needed. Therefore, Saudi Arabia is gradually opening its doors to citizens of other countries.
Opportunities and limitations when buying real estate in Saudi Arabia
— At the moment, a foreign investor can own one property in Saudi Arabia without reselling it. Not so long ago, a program called Premium Residency was launched with a number of privileges for citizens of other countries who want to invest money in the development of the kingdom. Its participants will be able to obtain a residence permit, the right to leave the country, change their place of work, take ownership of real estate and other benefits.
For those wishing to purchase housing in the kingdom, there are two options for participating in the program:
- A real estate investor.To get a visa, you need to buy (without mortgage loans) ready-made housing in the amount of at least 4 million Saudi reais (just over 1 million dollars at the current exchange rate), confirm the value of the object by accredited appraisers.
- Privileged accommodation. The investor needs to confirm his financial viability and the availability of the necessary amount of funds, pay a fee depending on the preferred length of stay. Up to 5 years — 100,000 Saudi reais (at the current exchange rate — about $26,500). For an unlimited visa — 800,000 reais (~$212,000).
Saudi Arabia has issued a special visa for investors. We tell you who can get it and how to do it
— Today, foreign investors have quite a lot of opportunities to work and live in Saudi Arabia. The ban on the purchase of housing for non-residents has been lifted New laws are regularly adopted to support citizens who are ready to invest their capital in the development of the country. However, there are still some limitations.
Foreign citizens are still prohibited from purchasing any housing in the cities of Mecca and Medina. These territories are considered holy sites of the Muslim world and only Saudis can own square meters there. However, visitors can inherit an apartment or villa in these cities.
In addition, foreigners have some restrictions on the disposal of property. In order to stop speculation in the Saudi real estate market, the authorities imposed a ban on the sale of housing by foreigners earlier than 5 years after the registration of the property.
It is quite possible that these restrictions will be significantly relaxed in the coming years, as the government is currently developing a law to support foreign investment. It is planned that it will enter into force in 2025.
The expected yield is up to 25% per annum.
Advantages of investing in real estate in Saudi Arabia
— Let’s list the main advantages:
- Advantageous location: accessibility of major international trade routes and high potential for global entrepreneurship.
- Financial stability: impressive oil reserves and a carefully thought-out strategy for the development of infrastructure and economic sectors.
- Developed infrastructure: a convenient logistics network for all types of transport, cutting-edge telecommunications systems.
- Loyalty to Russian-speaking citizens: About 100,000 Russians, including their family members, already live in Saudi Arabia. The Saudis highly value Russian-speaking specialists and, by the way, they often marry Slavs.
- High tourist potential: hot climate, oriental flavor along with amazing futuristic projects, endless deserts and beaches of the Red Sea attract hundreds of thousands of tourists.
- High population: today, more than 36 million people live in the kingdom (whereas, for example, in the UAE there are only about 10 million).
- The relatively low cost per square meter of housing: you can buy apartments or villas in the country at a fairly attractive cost — from $ 5,000 per square meter, whereas in the UAE prices start from about $ 10,500 per “square”.
- Doing business without bureaucracy: convenient digital services and transparent registration conditions almost completely eliminate bureaucratic delays and administrative obstacles when newcomers enter the market.
The main myths associated with such investments
— There are three main myths related to real estate investments in Saudi Arabia.
- Myth No. 1. High investment risks. In fact, the government of the kingdom is trying to stabilize the real estate market as much as possible and adheres to a clear strategy for the development of the state, as well as taking measures to support foreign investors and create a favorable business climate in the country.
- Myth No. 2. Inaccessibility for foreign investors. In reality, strict laws and restrictions remain in the past. The government, on the contrary, seeks to attract investors from abroad and simplify the process of buying real estate.
- Myth No. 3.Overpriced prices. In fact, real estate prices in Saudi Arabia can be very attractive, especially in comparison with other Gulf countries. The main thing when buying a home is to choose the right region and assess the market situation.
Profitability of investments in the “square meters” of the Kingdom
— Foreign investors have already turned their eyes to this Arab country, which is tempting from all points of view. Many are waiting for the adoption of a new package of privileges. Therefore, according to our forecasts, in the first years after the opening of sales for citizens of other countries, the return on investment will be very high — from 20 to 25% per annum. This will be due to demand, which obviously exceeds supply.
In general, today in Saudi Arabia is expected to see a slow rise in villa prices and a decrease in the cost of square meters in apartments. However, these forecasts do not apply to the capital of the state of Riyadh, where the rate of price growth is expected to decrease.
Author
Yulia Yanukovych Editor-in-Chief
I am responsible for the work of the editorial office. I write expert interviews and guides.
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