Saudi Arabia is among the wealthiest nations, with a GDP purchasing power parity of $55,368. In addition to its oil reserves, it has a robust agricultural sector and significant mineral resources such as gold. Moreover, with an increasing population and an economy fueled by Saudi Vision 2030 (which includes diversifying into new sectors such as mining and petrochemicals), Saudi Arabia’s real estate market is poised for considerable growth in the coming years.
The Middle Eastern country covers an area of approximately 2,150,000 square kilometres and has a population of approximately 32 million people. In recent years, Saudi Arabia has been investing heavily in its infrastructure. The government has plans to build new airports, railways, and highways. They are also working on improving the healthcare and education systems in the country. As a result, home prices have been rising steadily, and there is a high demand for properties.
The world’s largest construction site
With an investment of SR4.13 trillion ($1.1 trillion) in real estate and infrastructure since Saudi Arabia’s Vision 2030 launch in 2016, the Kingdom is on course to become the largest construction site in the world, as per the international real estate consultancy Knight Frank.
According to the real estate company, Riyadh’s population will increase from an estimated 7.5 million to 17 million by 2030. Since the commencement of the Kingdom’s National Transformation Plan in 2016, the city has launched real estate projects worth $104 billion. Faisal Durrani, partner and head of Middle East research at Knight Frank, said, “Vision 2030 has fanned the spark of excitement across the Kingdom, and with NEOM positioned at the heart of the transformative plans, people are eager to be part of history.”
Durrani added that with over 275,000 hotel rooms, 555,000 residential units, over 6.1 million sq.m of office space, and more than 4.3 million sq.m of retail space planned for the Kingdom, Saudi Arabia would undoubtedly surpass all previous records for the largest construction site.
According to Harmen de Jong, partner, and head of real estate for Strategy & Consulting in the Kingdom, the consultancy is now keeping an eye on 15 giga-projects throughout the Kingdom, many of which are brand-new independent supercities. When NEOM (a Saudi super city) is finished, it will be the largest giga-project declared to date, housing 9 million people in over 300,000 new homes. After NEOM and The Red Sea Project, Diriyah Gate ranked third in popularity among 1,000 Saudi households for home ownership.
According to Durrani, NEOM fundamentally alters urban life in areas with limited resources. Sub-cities like the Trojena, Octagon, and the Line will also raise the bar for abundant living in the region. A second home in NEOM will cost more than $800,000 for almost 30% of Saudi homeowners. To meet this unmet need, developers will have their work cut out for them, Durrani continued. According to De Jong, just $ 7.5 billion of the projects’ subprojects have been launched, and only 29% of the project’s overall construction has been completed.
The rise of Riyadh
Another eye-catching megaproject is the $20 billion Diriyah Gate, which, when finished in 2027, will provide Riyadh with 20,000 houses and a historic neighbourhood the size of a city. Knight Frank calculated the cost of building Diriyah Gate to be around $2.3 billion.
Riyadh’s reinvention as the Kingdom’s commercial hub is well underway, not to be outdone. And companies globally are already vying to be at the centre of the second and most crucial global hub for the Middle East. The proposed construction of 2.8 million square metres of top-notch office space could not arrive at a more opportune moment, given that 97% of Grade A offices in the city are already occupied, according to Durrani.
Knight Frank says $147 billion international airport is also about to open. The new airport receives over 74% of the $200 billion national infrastructure investment. House prices are rising quickly and are currently about 26% more than last year, he said, adding that the city is also attracting many internal migrants.
With the $23 billion Green Riyadh project, which involves planting 7.5 million trees in the Saudi capital to make it a green, thriving metropolis, and the $500 million Riyadh Sports Boulevard, the Kingdom is also enhancing and delivering world-class urban surroundings for its citizens. Additionally, it includes a $13.8 billion plan for 19,000 hospital beds, of which $8.6 billion will be spent in Riyadh Province alone. De Jong claims that $82 billion is being spent on constructing more than 80 new educational institutions. Furthermore, the transformative plans’ focus on healthcare, education, and well-being “sits at the core of the exceptional evolution in the Kingdom’s physical realm, making it unrecognisably from what we see now by the end of the decade,” according to Durrani.
Homeownership for all Saudi nationals
Saudi Arabia has opened 2,957 new free land plots for eight housing projects to increase the number of homes owned by its citizens. According to the Saudi Press Agency, the eight schemes are spread throughout five regions: Riyadh, the Eastern Province, Madinah Munawwarah, Makkah Al-Mukarramah, and Aseer Province. The Sakani program’s website has an internet gateway that beneficiaries may access if they want to take advantage of the free lands. The website outlines a variety of housing and financial choices, including pre-built homes and homes being built in collaboration with skilled real estate developers.
The Sakani programme was established in 2017 by the Ministry of Housing and the Real Estate Development Fund to promote home ownership in the Kingdom by creating new housing stock, distributing plots and homes to citizens, and financing their purchases. The initiative helps attain the housing program’s goal of increasing Saudi family house ownership to 70% by 2030, which aligns with the Kingdom’s Vision 2030.
Buying land in Saudi
Saudi Arabia’s real estate is booming, and it would be the ideal time to invest in the Kingdom. The following are some frequently asked questions by foreigners who wish to buy land in the gulf country:
What should I understand before buying a home in Saudi Arabia?
Price is discussed directly between the buyer and seller or with the help of intermediaries like real estate brokers or attorneys. Real estate ownership by foreign nationals is permitted, but only with the licencing authority’s consent. Property can be bought by foreign investors for building and investment, although this too needs prior approval.
What steps are involved in registering a piece of property in Saudi Arabia?
Property registration in Saudi Arabia consists of three primary steps that typically take no more than a few days:
Through the First Notary Public Department, the buyer searches for the property’s title
The buyer follows the process to ensure that the information on the property deed provided by the seller matches what is found in the agency’s database. The seller must give the buyer permission to access this data. This process is carried out to get a formal, in-depth description of the property and to see if it has any recorded encumbrances.
The buyer and seller schedule a notary public appointment online
Parties should make an appointment online at www.moj.gov.sa to request a transfer; the work can be reserved immediately. Then, the client and dealer go to the first window of the First Notary Public Department on the day specified. Employees will ensure that all the required paperwork is in order and accurate.
The required paperwork is listed below: Cards of identification, Check Certified, Deed/ownership documentation, and Original copies of the association’s bylaws. (If Necessary), An original copy of the registration certificate. (If Necessary), A power of attorney certificate. (If Necessary).
The parties sign the deed before the notary, who also issues it
The front desk is where guests check in first and are given a room number where the transfer will occur. The notary gathers the required paperwork, performs one last inspection, and authenticates the sale and the owner’s name change. A new deed is then produced after the buyer hands the seller the cheque. The buyer receives this deed with the notary’s signature, and the notary retains a copy with the signatures of both parties.
Is Saudi Arabia a viable option for financing real estate?
Depending on the client’s requirements, Saudi Arabian banks or mortgage businesses may lend buyers up to 85% of the value of a home.
Is a report on the property inspection necessary?
An inspection report is not needed to be sent to the buyer by the seller. The buyer is free to undertake the inspection on their dime.
Are any costs associated with buying property through the land registry?
A 500 S.R. charge is needed to transfer ownership of a residential unit or piece of land, and a 5,000 S.R. fee is required to transfer ownership of a commercial structure or piece of land.
What are the brokerage charges?
Brokerage costs, whether paid by the buyer or the seller, must not be more than 2.5% of the listing price of the property sold in Saudi Arabia.
Real estate price up 1.5%
Meanwhile, the recent statistics from the General Administration for Statistics showed that the Real Estate Price Index in Saudi Arabia climbed by 1.5% in the first quarter of 2022 compared to the same time last year, mostly due to an increase in residential properties. Agricultural and commercial real estate had marginal price declines, which had a dampening influence on the overall index while residential real estate prices grew by 2.5%, driven by a 2.6% gain in land plot prices.
The GASTAT study shows that the prices of commercial and agricultural real estate decreased by 0.4% and 0.6%, respectively. According to the research, the cost of villas grew by 0.2% while the cost of flats jumped by 1%. While residential building prices remained stable and did not show any major relative change, home prices declined by 0.7%, GASTAT’s data revealed.
The research also stated that a 0.4% decrease in the cost of commercial land plots was to blame for the decline in commercial real estate prices. Due to the 0.6% decline in the price of agricultural land, agricultural real estate values also fell.
According to the data, the General Real Estate Price Index increased 0.3% on a quarterly basis. Residential real estate prices increased by 0.4 as the cost of land increased, supporting this growth.
In contrast, residential building prices were stable last quarter while prices for villas and houses decreased by 1.5% and 0.3%, respectively. The survey also showed that while commercial buildings maintained their value, the cost of exhibitions declined by 0.1%. Likewise, compared to the first quarter of 2021, the agriculture sector did not exhibit any discernible shift.