The property market in Saudi Arabia

An introduction to buying a property in Saudi Arabia

Saudi Arabia have relaxed the property laws to encourage foreigners to buy property within the Kingdom. However, investing in a Saudi Arabian property isn't necessarily the right decision for expats. 

In Saudi Arabia there is a shortage of homes on the market for the increasing population size. Furthermore, the real estate market is a little bleak in that most citizens and expats cannot afford to buy their own property. This can especially be seen in the capital, Riyadh, whereby more than half of the population rent rather than own a property.

In order to boost the stagnant real estate market, changes have been enforced by the Saudi government. Money is being invested to create more homes to reduce the demand - schemes aim to create 500,000 new units over the next few years. In addition, rules with regards to mortgages are being made more flexible so that nationals are encouraged to take out loans to invest in the real estate sector.

A further solution to reviving the Saudi real estate market was to ease the laws which prohibited foreigners from buying property in Saudi Arabia. Expats can now buy property for business or residency purposes and invest in private land with the aim to construct - although approval is necessary from the authorities. However, Medina and Mecca, the two holy cities, are still out of reach for expats in order to avoid the loss of culture and religion in the area.

In order to purchase your own property, approval is necessary from the Ministry of Interior. Factors taken into consideration will be your financial background and current profession.

Foreigners living in Saudi Arabia tend to invest in buying property outside of the Kingdom, for example, in Dubai. Think long and hard as to whether purchasing a home or land in Saudi Arabia is the right decision for you, in some circumstances it is more convenient to rent. Here are some factors to take into consideration when deciding whether renting or buying a home is the right option for you:

• Flexibility: If you prefer flexibility in your life, then perhaps renting accommodation would suit your lifestyle rather than the stability of having your own house.
• Cost: Purchasing your own property may be an investment but don’t over look how much it will cost you! Take into account mortgage processing fees, down payments, early settlement costs, maintenance, building insurance.
• Duration: If you are a short-term expat, perhaps staying in the country for only a few years, save yourself the hassle and cost of buying a home and consider renting.
• Licensing authority: As an expat you will need approval from authorities, such as the Ministry of Interior, before being able to purchase your own property. Check that you are eligible in the eyes of the authorities to buy a property before searching for your dream home.

If you are certain that buying a Saudi property is for you, make sure you do your research. Banks vary in the mortgages their offer, so do compare and contrast! Once you know what your financial flexibility is you can then narrow down your search for the ideal property.