NEOM: The Prime Real Estate Choice for Expat Investors in Saudi Arabia
Expatriates in Saudi Arabia have set their sights on NEOM, making it their top choice for real estate investments.
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According to a report by Knight Frank, Expatriates in Saudi Arabia have a collective investment budget of approximately $863 million for the real estate sector. NEOM stands out as the most sought-after destination, with 29% of Saudi-based expats expressing a desire to purchase homes there, highlighting its status as the preferred giga project.
Investment Preferences and Budget Insights
The report, titled “Destination Saudi,” reveals that following NEOM, Jeddah Central and King Salman Park are the next popular choices among expats, with preferences standing at 15% and 8% respectively. The survey conducted by Knight Frank involved 241 expatriates residing in Saudi Arabia, aiming to delve into their investment behaviors and preferences. A significant portion of these expats, 56%, have lived in the Kingdom for over a decade, and 76% are employed in the private sector.
Specific interests within NEOM include The Line, Sindalah Island, and Sharma Valley, attracting 42%, 19%, and 10% of potential investors respectively. Faisal Durrani, Knight Frank MENA‘s Head of Research, emphasizes the global intrigue sparked by Saudi Arabia’s ambitious giga projects, with NEOM leading as the essence of futuristic urban development.
Financial Preparedness and Young Investors
The study found that 87% of expatriates are willing to invest up to $933,000, with a notable 32% considering investments below $200,000. This poses a challenge for developers, given the expectation that most properties in these projects will exceed the $1 million mark. However, when faced with this reality, 41% of expats remained interested in purchasing within giga projects, showing a readiness to adjust their budgets.
The willingness to invest in preferred giga projects is strong, with 72% of expatriates likely to make a purchase. The average investment budget for a home in a giga project stands at $720,000, significantly higher than the budget for properties elsewhere in the Kingdom. Interestingly, millennial expats, those under 35, are showing the highest investment potential, with budgets averaging $1.1 million.
Expatriate Spending Power and Premiums
Harmen de Jong, Knight Frank MENA’s Head of Consulting, highlights the substantial spending power of Saudi expats, estimated at $152 million. Extrapolated across Riyadh’s professional workforce, this indicates a potential investment capacity of $863 million. Expatriates are also willing to pay a premium for living in giga projects, with 32% prepared to spend 2.5-5% more than market rates, and the average premium willingness standing at 5.7%.
High-income expatriates, particularly those earning over $10,700 monthly, are notably ready to pay a premium of 5-7.5% for properties in giga projects. Mohamad Itani, a partner at Knight Frank, points out the enthusiasm among high earners for giga project homes, emphasizing the importance of distinctive community features and amenities to attract these investors.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Villa prices saw particularly strong growth, with capital values increasing by 33.4 percent year-on-year
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Dubai’s real estate market showed strong performance in the second quarter of 2024, with notable increases across the residential, office, and retail sectors, according to a new ValuStrat real estate report for Q2 2024.
Villa prices experienced particularly strong growth, with capital values rising by 33.4 percent year-on-year.
Haider Tuaima, Director and Head of Real Estate Research at ValuStrat said: “The Dubai real estate market has shown impressive growth and resilience in recent months. The ValuStrat Price Index for Residential Capital Values increased by 6.4 percent quarterly and 28.2 percent annually, reaching 178.2 points.
“Despite severe flooding caused by record rainfalls in April, the quick and effective response from developers and authorities helped to control the damage, ensuring that market activity and property valuations remained robust in the subsequent months.”
The office sector also performed well, with the VPI for office capital values surging by 31.7 percent annually and 9.4 percent quarterly, reaching 212.5 points—the highest quarterly increase in a decade.
In the retail sector, Emaar Properties reported 98 percent occupancy in their prime mall assets, while overall mall occupancy stood at 96 percent during the first quarter of 2024. The hospitality sector also saw growth, with total international guests reaching 8.12 million as of May 2024, a 9.9 percent increase compared to the same period last year. Hotel occupancy reached 81 percent, rising by 1.4 percent year-on-year.
Despite these positive indicators, Tuaima added, “The decline in transaction volumes calls for a closer examination of market dynamics as stakeholders navigate this evolving landscape.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
