Knight Frank surveyed 241 foreigners in Saudi Arabia and found that the main motivation for property purchases is seen as a good investment opportunity, particularly among the influential millennial generation.
The survey results indicate a preference among foreigners for completed apartments over villas. White-collar workers have a potential demand for large-scale project properties amounting to USD 863 million, while the affluent class also shows strong interest in branded residences.
To meet this demand, Saudi Arabia has introduced premium residency visas tied to property ownership. However, the survey reveals that only 9% of respondents are willing to spend over SAR 3.5 million (approximately USD 930,000) to purchase this special residency permit, while the threshold for the permit is set at SAR 4 million.
As most respondents are willing to allocate up to SAR 1.5 million for Saudi Arabian property, with a significant portion unwilling to exceed SAR 750,000, there are some disparities in purchasing intentions.
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Knight Frank states that despite the increase in demand, urgency is not immediate. Survey results show that only 26% plan to purchase property this year, while 44% plan to do so within the next year to 24 months.
The company emphasizes that this cautious approach may be due to significant price increases over the past three years. Apartment prices in Riyadh are approximately SAR 5,150 per square meter, while villa prices are around SAR 4,900 per square meter.
The Saudi Arabian government aims to achieve a 70% homeownership rate by 2030 through mortgage programs, thereby driving further demand growth. However, Knight Frank also points out that increased demand poses affordability challenges, leading to a 16% decline in overall transaction activity last year.
Knight Frank underscores that Saudi Arabia's Vision 2030 has had a significant impact on the real estate market, making Riyadh the preferred destination for property purchases, especially among millennial buyers. This trend is attributed to Riyadh's appeal as an attractive tourist and entertainment destination, as well as the authorities' hosting of various entertainment seasons and cultural, sports, and arts events.
