Home ownership eyed by 77% of Saudi-based expats, reveals survey

According to the report, Riyadh has 131 residential compounds, with 38 categorized as Western and 93 as non-Western. Jeddah, on the other hand, has 98 gated compounds, including 19 Western and 79 non-Western. (Shutterstock)
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Updated 17 March 2024

Home ownership eyed by 77% of Saudi-based expats, reveals survey

  • Primary motivation for property purchasing in KSA is its perceived status as a good investment

RIYADH: A new premium residency visa has spurred home-ownership demand among Saudi-based expats, with 77 percent now looking to buy a property, a survey has revealed.

Global property consultancy Knight Frank surveyed 241 expatriates in Saudi Arabia, and discovered the primary motivation for real estate purchasing in the Kingdom, especially among millennials, is its perceived status as a good investment.

The desire for a close proximity to work and cultural or religious factors followed closely behind.

The survey findings also indicated a preference among expats for completed apartments over villas, with a potential demand of $863 million from the white-collar workforce for giga-project properties, alongside notable interest in branded residences among higher-income brackets.

The newly introduced premium residency visa linked to property ownership aims to meet some of the demand, however, the survey indicates that only 9 percent of respondents are willing to spend over SR3.5 million ($930,000), while the visa threshold is set at SR4 million.

Challenges arise as most respondents are comfortable allocating up to SR1.5 million for property in Saudi Arabia, with a substantial portion unwilling to exceed SR750,000. 

Additionally, average property prices in Riyadh and Jeddah range between SR800,000 and SR2.7 million, posing further constraints for this group.

Survey findings also underscore a greater propensity for investment among millennials, with 22 percent allocating budgets exceeding SR2.5 million, while female expats show a higher-end budget allocation surpassing SR3.5 million. 

The total combined budget among the 241 surveyed expats amounts to SR318.3 million. 

The urgency of demand according to Knight Frank is not immediate, as survey results revealed that only 26 percent are looking to buy this year while 44 percent are aiming for a purchase within the next year to 24 months.

This cautious approach, as per the firm, could be attributed to the significant rise in house prices over the past three years, with Riyadh experiencing apartment prices at SR5,150 per sq. m. and villa prices at SR4,900 per sq. m.

This surge in demand is driven by the government’s goal of achieving a 70 percent home ownership rate by 2030, supported by mortgage programs. However, according to Knight Frank, the increased demand has also led to affordability challenges, resulting in a 16 percent decline in overall transactional activity last year.

The firm emphasizes the substantial influence of the Kingdom’s Vision 2030 in making Riyadh the top choice for property purchases, particularly among millennials. This is attributed to the city’s appeal as an attractive destination for tourism and entertainment, thanks to the various entertainment seasons and a wide array of cultural, sporting, and arts events created by the authorities.

In the survey, Jeddah emerged as the second most desired city for property purchase, followed by Dammam and Madinah.

The survey revealed a notable shift in expat preferences, with 68 percent expressing a strong inclination towards owning an apartment rather than a villa. This preference is particularly strong among those aged 35-45 and 45-55, the firm added.

Additionally, the choice between apartments and villas seems to vary with income levels. For instance, 92 percent of expats earning more than SR40,000 per month prefer villas, while 60 percent of those earning between SR30,000 and SR40,000 per month lean towards townhouses.

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.

Mohamad Itani, Knight Frank partner and head of residential project sales and marketing

The shift from villas to apartments for the majority of respondents is likely influenced by factors such as the higher cost associated with villas, affordability considerations, and possibly differing cultural preferences compared to Saudi nationals, the firm said.

The appeal of apartments is further highlighted by the fact that 53 percent of surveyed expats expressed a preference for owning a two or three bedroom apartment. This inclination is likely due to the smaller family sizes typically found among expats compared to Saudi nationals.

Knight Frank showed that 63 percent of respondents prefer to buy completed properties, while 26 percent are interested in off-plan purchases. This preference may have implications for developers according to the firm as they navigate Saudi Arabia’s 660,000 residential unit pipeline in the next six years.

Expat property buyers are willing to pay an average annual service charge rate of 5.9 percent of the property value.

According to Knight Frank, the rising demand for residential communities is driven by an increasing number of Western expatriates seeking a lifestyle that matches their expectations. 

These gated communities, known for their amenities such as swimming pools, cafes, and fitness centers, offer a high standard of living, the firm noted.

Western compounds are characterized by their larger size, superior services, extensive amenities, and heightened security, typically catering to Western expats. 

In contrast, non-Western compounds are smaller, with fewer facilities, and primarily occupied by Arab and Asian expats. 

In Knight Frank’s survey of expats, a notable appeal was found for residential compounds, with 75 percent expressing interest, a figure that rises to 77 percent among millennials.

This interest, as per the firm, correlates closely with income, with the percentage climbing to 94 percent among those earning over SR40,000 monthly. Among expats under 35, this percentage rises further to 85 percent, with females showing particularly heightened interest compared to males.

According to the report, Riyadh has 131 residential compounds, with 38 categorized as Western and 93 as non-Western. Jeddah, on the other hand, has 98 gated compounds, including 19 Western and 79 non-Western.

The top three sought-after features in a residential community include onsite essentials such as supermarkets and clinics, management services including maintenance and security, and transportation facilities like bike storage and parking.

According to Knight Frank, NEOM emerged as the most sought-after giga-project among expats. However, discrepancies between their budgets and the project’s expected prices posed a limitation. Nonetheless, a considerable proportion of respondents, particularly millennials, expressed willingness to reconsider their budget to afford a residence in NEOM.

Mohamad Itani, Knight Frank partner and head of residential project sales and marketing, 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.”

The average budget for giga-projects among expats stands at SR2.7 million, surpassing the SR1.7 million average elsewhere in the Kingdom. This translates to a total spending power of approximately $152 million among Saudi surveyed expats. When projected to the Kingdom’s 1.2 million white-collar workforce, the potential dry powder capital is estimated to be $863 million.

The top pull factors for owning a home in any of the giga-projects, as indicated by respondents, were parks and green spaces and family entertainment. Following closely were investing in Saudi Arabia’s future Vision 2030, world-class entertainment and theme parks, and climate. These factors outline the key considerations expats have regarding giga-project homeownership.

However, expats emphasized that local bank financing options would significantly influence their decision, especially given the discrepancy revealed between expats’ budgets and the current market pricing for branded residences, which surpasses what they can afford.

According to Knight Frank, the rising popularity of branded residences in Saudi Arabia presents a lucrative opportunity for developers, considering the strong demand from both global high net worth individuals and expats.

With 55 percent of expats willing to spend up to SR1.5 million, there is potential for developers to introduce branded products into their residential portfolios.

Offering timeshare options and collaborating with local banks to provide mortgages could further stimulate demand, the firm concluded.

Saudi Arabia set to welcome 300 millionaires in 2024: Henley & Partners

Updated 19 June 2024

Saudi Arabia set to welcome 300 millionaires in 2024: Henley & Partners

RIYADH: As many as 300 millionaires will flock to Saudi Arabia in 2024 as the Kingdom continues to attract high-net-worth individuals, according to a study. 

In its latest report, Henley & Partners said that Saudi Arabia’s capital Riyadh as well as Jeddah are becoming “increasingly popular” with immigrant millionaires,especially from North Africa and the Middle East. 

“In our view, these two cities have the potential to mimic Dubai and Abu Dhabi in attracting large numbers of wealthy expats in the future,” said the British consultancy firm in the release. 

According to the analysis, the UAE is continuing its run as the top destination of choice for HNWI, with an estimated 6,700 millionaires expected to make the country their home by the end of 2024.

“For the third year running, the UAE looks set to take first place as the world’s leading wealth magnet, with a record-breaking 6,700 moneyed migrants expected to make the Emirates home by the end of the year, significantly boosted by large inflows from the UK and Europe,” said the British consultancy. 

According to the report, the UAE’s tax-free income, golden visa residency program, and geographic location have made it a favorite destination for migrating millionaires. 

The Group Head of Private Clients at Henley & Partners, Dominic Volek, said that 2024 is shaping up to be a watershed moment in the global migration of wealth. 

“An unprecedented 128,000 millionaires are expected to relocate worldwide this year, eclipsing the previous record of 120,000 set in 2023. As the world grapples with a perfect storm of geopolitical tensions, economic uncertainty, and social upheaval, millionaires are voting with their feet in record numbers,” said Volek. 

He added: “In many respects, this great millionaire migration is a leading indicator, signaling a profound shift in the global landscape and the tectonic plates of wealth and power, with far-reaching implications for the future trajectory of the nations they leave behind or those which they make their new home.” 

The UAE is followed by the US and Singapore, with 3,800 and 3,500 millionaires set to live in these countries by the end of this year. 

Canada grabbed fourth place in the list, with a projected 3,200 HNWI flocking to the country, followed by Australia and Italy with 2,500 and 2,200 millionaires coming to these nations, respectively. 

Switzerland came in the sixth spot in the list, with an estimated 1,500 millionaires relocating to the country, followed by Greece and Portugal at 1,200 and 800, respectively. 

The report highlighted that the UK is expected to see an unprecedented net loss of 9,500 millionaires in 2024 — second only to China worldwide and more than double the 4,200 who left the country last year. 

According to the analysis, China is expected to be the biggest millionaire loser globally, with an anticipated net exit of 15,200 HNWIs this year, compared to 13,800 in 2023.

Egypt’s exports surge 9.8% to $16.55bn amid global trade expansion

Updated 19 June 2024

Egypt’s exports surge 9.8% to $16.55bn amid global trade expansion

RIYADH: Egypt’s merchandise exports soared by 9.8 percent year-on-year in the first five months of 2024 to reach $16.55 billion, according to a top official.     

Exports increased every month over the period, underscoring the north African country’s ongoing expansion in global trade, according to Egypt’s Minister of Trade and Industry Ahmed Samir.   

Notable items that contributed to the growth included fresh and dried citrus fruits valued at $721 million, wires at $353 million, and manufactured petroleum oils at $186 million.      

Key export sectors also included building materials, valued at $3.86 billion, the food industry at $2.64 billion, and chemical products and fertilizers estimated at $2.49 billion.   

Agricultural crops were worth $2.26 billion, according to a statement.   

The ministry aims to bolster exports across all sectors to diverse global markets in the coming phase, emphasizing collaboration between government entities, business communities, and Egyptian exporters to enhance product quality and competitiveness. 

This effort supports Egypt’s target of achieving $100 billion in annual merchandise exports.   

Moreover, the statement revealed that Saudi Arabia emerged as the top market for Egyptian merchandise exports during this period, totaling $1.39 billion. 

Following Saudi Arabia, Turkiye accounted for $1.31 billion, the UAE at $1.13 billion, Italy with $974 million, and the US at $904 million.   

In May, Egypt’s Central Agency for Public Mobilization and Statistics revealed that the value of Egyptian exports to Arab countries surged 8.7 percent year-on-year, reaching $13.6 billion in 2023. 

Saudi Arabia led among Arab nations in importing from Egypt, with exports totaling $2.7 billion during the year, according to the statement issued last month. 

This trend underscores the substantial growth in trade relations, partnerships, joint projects, and development investments between the two countries in recent years.     

Last month, the International Monetary Fund projected that Egypt’s foreign cash inflows would come from five sources, including commodity exports, tourism and Suez Canal revenues, as well as private transfers and net foreign direct investment.      

The fiscal year 2023-2024 total will be around $107.3 billion, compared to about $93.6 billion in 2022-2023.      

However, the IMF anticipates inflows to decrease again in the next fiscal year, dropping below the previous year’s level to approximately $91.2 billion. 

King Abdulaziz Port boosts infrastructure with new cranes, enhancing global maritime hub status

Updated 19 June 2024

King Abdulaziz Port boosts infrastructure with new cranes, enhancing global maritime hub status

RIYADH: Saudi Arabia’s King Abdulaziz Port’s crane capacity has been boosted by 9.7 percent as part of an SR7 billion ($1.86 billion) investment deal.

The facility, operated by Saudi Global Ports Co., has received three automated quay and three rubber-tired gantry cranes, increasing its handling infrastructure.

According to a press release from Saudi Ports Authority, also known as Mawani, this addition brings the total number of quay cranes to 18 and gantry cranes to 50, enhancing the Dammam port’s workflow and enabling it to handle large ships efficiently.

These enhancements are made under commercial contracts between Mawani and Saudi Global Ports Co. 

This development is part of ongoing efforts to strengthen King Abdulaziz Port’s position as a competitive and sustainable global hub.

The new cranes can reach a minimum of 25 rows, which facilitates the efficient handling of advanced and large ships. 

Additionally, the use of modern cranes contributes to improving the skills of the workforce, supporting the Saudi ports system and solidifying the Kingdom’s growing role in the global logistics chain.

This upgrade aligns with the goals of the National Transport and Logistics Strategy, which aims to establish the nation as a global logistics center and a key link between continents.

Saudi ports are experiencing a constant surge in handling shipments. In March, terminals in the Kingdom recorded a 12.48 percent increase in the number of received containers compared to the same period last year, according to official data from Mawani.

The Authority disclosed that terminals in Saudi Arabia received 265,148 standard containers in the third month of 2024, marking an annual increase from 235,738.  

Furthermore, the maritime facilities experienced a 3.77 percent uptick in the volume of handled tonnage, reaching 19.64 million tonnes, in contrast to 18.93 million tonnes recorded in March 2023.    

“This reflects the scale of efforts made to develop port infrastructure and provide the highest levels of logistics services,” Mawani stated in a statement.

The Kingdom’s general shipment volumes reached 804,837 tonnes, solid bulk cargo reached 3.94 million tonnes, and liquid bulk freight reached 14.74 million tonnes.

A report from the UN Conference on Trade and Development revealed that Mawani climbed from 76.16 points in the second quarter of 2023 to 77.66 points in the third quarter of last year, affirming Saudi Arabia’s progress in the maritime sector.

Moreover, the Kingdom has consistently pursued global collaborations in the maritime sector, the latest of which occurred at the second edition of Vision Golfe 2024, held in Paris on June 4.

At the event, Mawani signed an agreement with the French Ministry of Economy, Finance, and Industrial and Digital Sovereignty and its Marseille counterpart as part of France and Saudi Arabia’s commitment to excellence in trade and maritime transport.

Riyadh among top 5 MENA startup ecosystems, report states

Updated 19 June 2024

Riyadh among top 5 MENA startup ecosystems, report states

RIYADH: Saudi Arabia’s capital Riyadh is among the top five startup ecosystems in the Middle East and North Africa region, according to new data. 

The international policy advisory and research organization Startup Genome, in collaboration with the Global Entrepreneurship Network, revealed that three of the Kingdom’s cities were among the top-ranked startup ecosystems in the region. 

Riyadh was ranked fourth, with Jeddah and Alkhobar also making the list, according to Startup Genome’s latest Global Startup Ecosystem report. 

The criteria for inclusion in the list required ecosystems to be ranked in the top 40 global leaders or top 200 emerging environments or to have a value greater than $200 million. 

Furthermore, Riyadh was also one of two MENA ecosystems making the global list of cities with four or more unicorns in the last 10 years, the other being Dubai. 

A company is termed a unicorn when it reaches a valuation of $1 billion without being listed on the stock market. 

The report highlighted that the capital was ranked between 51 and 60 internationally, with its funding performance ranking seven out of 10. 

The Kingdom was also praised for its proactive approach to embracing artificial intelligence, with the report highlighting the nation’s $40 billion commitment to boosting the technology. 

The UAE’s capital, Abu Dhabi, was ranked as the fastest-growing startup ecosystem in the region, with a global rank between 61 and 70. 

“In a nation emboldened by its strategic vision to become a dominant global technology hub, the UAE is establishing its capital city as one of the world’s most prominent destinations for high-growth technology companies,” the report stated. 

Abu Dhabi’s ecosystem was valued at $4.2 billion, with one unicorn between 2021 and 2023. The city also saw a median funding of $825,000 in seed rounds. Total venture capital funding amounted to $1.1 billion between 2019 and 2023, with 16 exits during the same period. 

The region has seen significant growth in venture capital and startup development in recent years, mostly driven by Saudi Arabia. 

In 2023, the Kingdom secured 52 percent of the total VC funding in the MENA region, a substantial increase from the 31 percent share it held in 2022. 

Saudi Arabia’s startup ecosystem ranked first in regional venture funding activities in 2023, amassing an unprecedented $1.38 billion in capital.  

This achievement positioned the Kingdom at the forefront of venture capital funding in the Middle East and North Africa, surpassing the $1 billion mark for the first time, as reported by MAGNiTT in their Saudi Arabia FY2023 report. 

Half of Saudi Arabia’s World Defense Show 2026 floorspace already snapped up by exhibitors

Updated 19 June 2024

Half of Saudi Arabia’s World Defense Show 2026 floorspace already snapped up by exhibitors

RIYADH: International exhibitors have already secured half of the space at the World Defense Show set to be held in Riyadh in 2026, demonstrating strong early interest in the biennial event.  

The defense and security exhibition, scheduled for Feb 8-12 and covering an area of 800,000 sq. m., follows the successful conclusion of its second edition in February. 

The event attracted a record number of 773 exhibitors, all aiming to capitalize on the Kingdom’s status as one of the largest defense spenders worldwide.   

In the state budget announced in December 2023, Saudi Arabia allocated SR269 billion ($71.70 billion) for the military sector this year, reflecting an 8.5 percent increase from the 2023 estimates.    

Andrew Pearcey, CEO of the World Defense Show, said: “The demand has been phenomenal. Just four months after the second edition of the show closed, to global industry approbation, we have already sold 50 percent of the floorspace for the third edition.”    

He added: “Many of the industry’s leading multi-domain businesses booked their stands for 2026 during the 2024 event. I am in no doubt that World Defense Show 2026, will be an essential event for global companies across the defense supply chain.”   

The CEO highlighted that the third edition of the event further solidifies the entity’s position as the emerging global hub for the defense industry.   

The early bookings for the event are in line with the show’s vision to serve as a platform where the global defense industry can convene, connect, and gain valuable insights into the latest innovation-driven defense and security solutions.   

The event also aims to foster integration across air, land, sea, space, and security domains to accelerate advancements in defense technologies.  

“We have grown each year, in the size of our event, in the number of exhibitors and visitors, but also in the depth and breadth of expertise and influence of those taking part in our panels, presentations and discussions,” Pearcey said. 

“Our impact is effected in two ways, as a gateway to partnership and collaboration with the Saudi Arabian defense industry, but more importantly as a truly global networking and policymaking event, welcoming senior delegations from around the world to meet representatives of the international defense industry in a confidential and impartial setting,” he underlined. 

The World Defense Show team are attending Eurosatory 2024, held from June 17 to June 21 at the Paris Nord Villepinte Exhibition Centre. This event will allow potential exhibitors to learn more about the 2026 initiative and book their space while it is still available.  

The World Defense Show 2026 will see the return of many of the event’s networking features, including the “Meet the KSA Government” program, which shares the latest developments on the Kingdom’s business guidelines, investment requirements as well as partnership processes.

Held at the heart of the global supply chain, the show will bring together the most prominent players and start-up visionaries from the defense domain to collectively craft the sector’s future.