Expats in Saudi have an estimated $863m to spend on real estate investments and see NEOM as the leading destination, according to property experts Knight Frank.
29 per cent of Saudi-based expats would like to buy a home in NEOM, according to global property consultancy Knight Frank’s inaugural Destination Saudi report.
This positions NEOM as the most preferred giga project.
NEOM real estate investments in Saudi Arabia
Jeddah Central (15 per cent) and King Salman Park (8 per cent), follow in second and third place, respectively.
Knight Frank surveyed 241 expatriates in Saudi Arabia to understand their attitudes, aspirations and appetite towards real estate investment in Kingdom.
56 per cent of this group have been resident in the Kingdom for more than 10 years and 76 per cent of respondents work in the private sector.
Of those interested in NEOM, 42 per cent are interested in The Line, 19 per cent are interested in Sindalah Island and 10 per cent are interested in Sharma Valley.
Faisal Durrani, Partner – Head of Research at Knight Frank MENA, said: “Saudi Arabia’s Giga projects represent some of the most ambitious construction ever undertaken and it stands to reason that these new city-sized developments continue to captivate prospective buyers.
“NEOM has consistently ranked as the most preferred location for Saudi’s eyeing up future home purchases in the Kingdom’s giga projects and it appears that expats too have been wooed by the planned ultra-futuristic offerings at the Belgium-sized $500bn super-city”.
87 per cent of expats said they are prepared to spend under SR3.5m ($933,000). Notably, almost a third (32 per cent) say they will look to spend under SR750,000 ($200,000), which may cause challenges for developers as Knight Frank expects that the bulk of stock in the giga projects will be priced north of $1m.
When those with a budget of under $1m were presented with this information, 41 per cent of expats declared that they were still interested in making a purchase in a giga project and were also are willing to reconsider their budget.
Encouragingly, when asked about the probability making a residential purchase in their most preferred giga project, 72 per cent of our expat respondents said they will be likely to do so.
Overall, the average expat budget for a home in a giga project stands at SR2.7m ($720,000), nearly 58.8 per cent higher than for elsewhere in the Kingdom.
Millennial expats (those aged under 35) claim to have the deepest pockets, with average budgets of SR4.3m ($1.1m), nearly twice any potential allocation from 45–55-year-olds (SR1.5m/$400,000).
While this is counterintuitive, it is reflective of the higher aspirations the younger generation appear to have with regards to investing in the Kingdom.
Harmen de Jong, Regional Partner – Head of Consulting at Knight Frank MENA said: “Our group of Saudi expats have a total spending power of SR570m, or about US$ 152 million.
“Scaling this up across Riyadh’s white collar work force, would in theory suggest that dry powder capital worth SR3.2bn ($863m) is already amassed in the nation’s capital, ready to be deployed”.
When probed on the premia they would be willing to pay for living in any of the giga projects (compared to a non-giga project), almost a third (32 per cent) of expats say they would be prepared to pay a premium of 2.5-5 per cent above the prevailing market rate, while 25 per cent indicated that they would pay a premium of less than 2.5 per cent.
The average premium expats would be prepared to pay stands at 5.7 per cent.
Most (42 per cent) expats on monthly incomes in excess of SR40,000 ($10,700) are ready to pay a premium of 5-7.5 per cent, according to Knight Frank.
Mohamad Itani – Partner, Residential Sales and Marketing Projects, KSA said: “High-earning expats are eager to own property in the Kingdom’s giga projects and the fact that high earners are prepared to spend more on giga project homes will be welcome news for developers, but the key will be to offer distinctive community features and amenities that go above and beyond. Open spaces and having a park view, for instance tops expats’ wish lists”.
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