The futuristic Saudi city of NEOM topped the list of most preferred locations to buy a home among first-time buyers and high net worth individuals (HNWI) in the kingdom, the Knight Frank 2022 Saudi Residential Survey found.
Knight Frank, in partnership with YouGov, spoke with 1,003 households and 55 HNWI in Riyadh, Jeddah, and Dammam to get their feel for the future trends in real estate in Saudi Arabia.
NEOM, a $500bn Giga project that is at the heart of Saudi Arabia’s Vision 2030 plan, topped the list of most desired locations.
“The Kingdom’s new Giga projects represent a seismic shift in not only the quantum of real estate development unleashed in the kingdom, but also spectacularly mark the birth of what could be the emergence of one of the world’s hottest new real estate markets and Saudi nationals are alive to this fast-emerging reality,” Faisal Durrani, Partner – Head of Middle East Research, Knight Frank said.
“The gargantuan NEOM has clearly captured the imagination of Saudi’s all across the Kingdom, with the appetite to purchase here amongst tenants, homeowners and HNWI running above 70 percent. Indeed most are even willing to pay a premium for the privilege of living, or owning a home here. Developers have a real opportunity to tap into this surging demand and meet the clearly laid out expectations of potential buyers.”
In the HNWI survey, 60 percent also named NEOM as the Giga project they would be most interested in purchasing a home in. A staggering 97 percent of the HNWI group said they were likely to make a purchase.
“While 96 percent of HNWI plan to purchase a home in one of the country’s Giga projects, NEOM is far and away the favourite Giga project. This preference for NEOM above other Giga projects is echoed across HNWI in Riyadh (61 percent), as well as Jeddah (58 percent). And what’s more, 82 percent of NEOM’s HNWI supporters will be willing to pay a premium to live here,” Durrani added.
Red Sea Project takes second place
Among households, The Red Sea Development Project took second place after NEOM.
“Looking more closely at the results paints The Red Sea Project as more of an aspiration for would-be buyers and investors, rather than somewhere they will actually transact. Indeed ‘international-level luxury experiences’ at 50 percent was cited by HNWI as the main attraction for buying in The Red Sea Project, while for NEOM it is ‘investing in the Kingdom’s Future / Vision 2030’ that is the main driver at 45 percent,” Durrani noted.
The survey found that while only 9 percent of NEOM supporters said they had no prior knowledge of the project, this figure increased to 38 percent in regards to The Red Sea Project.
“NEOM’s planners have done an incredible job of promoting and positioning the city as THE place to live and the message has been received loud and clear. Private sector participation can take many forms to help alleviate some of the challenges of delivering the ambitious volume of real estate planned,” Harmen de Jong, Partner – Real Estate Strategy & Consulting, Knight Frank explained.
“The establishment of certification and training programmes for contractors, who aspire to become developers, will for instance, help to deliver the ambitious volume of real estate development being planned. Furthermore, it will foster better coordination between the private and public sectors, allowing the authorities to assume more of a supervisory and strategic role in transforming the nation, leaving the nuts and bolts of delivering the vision for a new Saudi to the private sector.”
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