Saudi Arabia’s decision to allow foreign investments in the domestic real estate sector has led to a massive surge in prices, with residential property prices in the capital city of Riyadh registering a 60 percent spike in the last six months, a latest research said.
The Saudi property market is also expected to see a quantum jump in foreign investments, especially from countries like Russia, the UK and the European Union, the report by Realiste, the Dubai-based proptech said.
The Saudi authorities announced early this year allowing foreigners to purchase assets across all segments of real estate in the country. This followed the 2021 directive allowing foreigners and legal residents of the country to purchase a single property with certain conditions.
“This is a game-changing decision which will revolutionize the Saudi real estate market. It is attracting investors worldwide,” Alex Galtsev, co-founder of Realiste, told Arabian Business.
Industry analysts see the move on allowing foreign investments in real estate as part of the country’s strategic plan to diversify its economy by promoting investments in non-oil sectors in a big way.
Galtsev said this plan is paying off in a big way, spurring investments in several new futuristic cities, which in turn, will lead to creation and demand for millions of housing units.
“The Realiste platform is seeing more and more interest towards the Saudi market from investors. According to the platform’s AI-driven projection, investors who buy 10 or 20 apartments in Saudi and leave it for five years, will be able to come back and see them grow by 100 to 200 percent over that period,” Galtsev said.
Saudi Arabia is reportedly investing about $575 billion in developing eight new megapolises, including Neom, Qiddiya, Red Sea Project and Amaala.
“This funding will lead to the development of 1.3 million housing units,” an industry insider said.
Industry experts said the expected large-scale migration of young Saudis from rural areas to cities in search of employment opportunities will also add to the demand for residential properties.
Riyadh alone is expected to see the addition of 100,000 new homes by the end of 2023.
FDI in real estate to have spin-off effects for economy
The Realiste report said allowing foreigners to acquire real estate in Saudi Arabia is also expected to generate a range of positive economic impacts in the country, besides a surge in property demand and prices.
“The increased foreign capital infusion will stimulate economic growth and provide resources necessary for other ongoing development. Besides, foreign investments can spur higher property prices and motivate new construction projects, thereby energizing the domestic real estate market,” the report said.
Anticipating a major expansion in the Saudi real estate sector, Realiste has recently entered the market through a $10 million joint venture with Ahmed Alenazi, ex-CEO at STC pay, to launch its cutting-edge technology to enable foreign investors to scout for real estate assets in the Saudi market.
“Our AI-driven tools such as ‘Index’ and ‘Portfolio’ can make the Saudi real estate market more transparent, accessible and attractive to foreign investors, ” Galtsev said.
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