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Property Investment for Expats in Saudi Arabia

Submitted: August 2014

Do not expect to start a buy-to-let business in Saudi Arabia. Expats buying property in Saudi Arabia are typically long-term residents who are purchasing their principal residence. Mortgaging is still resorted to only rarely.

In practice, expats who live in Saudi Arabia are keener to invest in property outside of Saudi Arabia, mostly in their home country, Egypt or the United Arab Emirates. Keeping real estate investments in the Middle East tends to be more popular among Asian or African investors.

Property rights are not that well protected in Saudi Arabia. This is particularly a cause for concern when you have something to enforce through the Saudi court system. When it comes to finding housing market statistics, finding reliable, up-to-date statistics may appear to be quite a challenge.

Foreign Property Investment in Saudi Arabia

Under Saudi law, foreign nationals may purchase property in Saudi Arabia, providing:

  • The property is intended for use as a private residence or for professional purposes, and
  • Prior approval is obtained.

In order to prevent speculation, foreign nationals may not resell their properties before a minimum five-year holding period.

In the cities of Mecca and Medina, foreigners may not own any land or property, though prohibition is currently under review.

 

Saudi Housing Market Generally

Fundamentally, Saudi Arabia is a country with high growth rates, a sharp population growth, soaring construction costs, a big housing shortage, high yields, rising rents, and still low prices by international standards. This all points to a long-term above-inflation house price boom in Saudi Arabia.

Home ownership is not common in Saudi Arabia, as just about 35% of Saudis own their principal residence. This is often because mortgage regulations are so tight that you have to buy property in cash. Accordingly, many would-be Saudi first-time buyers have to keep renting unless they come from a wealthy family in the first place.

Mortgages have become more available in Saudi Arabia though; it is now possible to apply for a mortgage with reasonable terms.

 

 

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