The Saudi Arabian government’s recent expansion of premium residency visa offerings is set to capture the interest of wealthy expatriates and investors, according to a new survey. The enhancements to the visa program are expected to significantly influence the residential real estate market within the Kingdom.
A report from Knight Frank, a global real estate consultancy, indicates that these changes signal a crucial shift in Saudi Arabia’s stance on residency and property ownership by foreigners, which could lead to increased activity in the market for residential properties.
The premium residency visa, introduced in 2019, is designed to enable qualified foreign nationals to live in Saudi Arabia, offering benefits like exemptions from expat and dependents fees, the freedom to travel without a visa, and the ability to own property and manage businesses without a sponsor.
In a bid to diversify its economy and attract international talent, Saudi Arabia introduced five new products to its premium residency program in January 2024, with a standout feature allowing foreigners to own residential real estate valued at a minimum of SR4 million ($1.07 million).
Knight Frank suggests that this SR4 million threshold is intended to bring about high-value investments in the real estate sector, potentially spiking the demand for luxury and premium residential properties and driving property values upward.
The UK-based consultancy predicts that developers will be encouraged to incorporate more high-end residential projects into their portfolios, transforming the urban landscapes of major Saudi cities such as Riyadh, Jeddah, and Dammam.
Talal Raqqaban, a partner at Knight Frank, emphasized the strategic importance of the visa scheme in opening the market to international investors and affluent expats seeking long-term residency options.
The introduction of this new visa scheme signifies a strategic opening of the market to international investors and affluent expatriates seeking long-term residency options.
Talal Raqqaban, Knight Frank Partner
The consultancy firm also notes that the demand for branded residences is a key driver in the growth of Saudi Arabia’s real estate sector, with the Kingdom becoming an increasingly attractive market for such investments globally.
Knight Frank’s data indicates that the number of high-net-worth individuals in Saudi Arabia increased from 122,784 to 134,539 between 2022 and 2023, which is expected to further stimulate demand for branded residences.
Mohamad Itani, a partner at Knight Frank, highlights the allure of branded residences, pointing out that the guaranteed quality service and maintenance by renowned brands make these properties especially appealing and likely to appreciate in value.
The assurance of quality service and maintenance by the associated brands makes investments particularly attractive and all but assures asset value appreciation.
Mohamad Itani, Knight Frank Partner
The report also mentions that NEOM, Saudi Arabia’s $500-billion mega project, is the top residential destination for expatriates, with 29 percent of survey respondents expressing a desire to purchase property there, followed by Jeddah Central and King Salman Park.
Interest in NEOM’s specific projects such as The Line and Sindalah Island was also highlighted, with the giga-projects capturing the imaginations of potential buyers due to their ambitious scope and futuristic plans.
Faisal Durrani, head of research for Knight Frank in the Middle East and North Africa, commented on the high interest in NEOM, stating that both Saudis and expats are attracted to the ultra-modern offerings of the massive city-sized development.
Survey results revealed that a majority of expatriates are willing to invest below SR3.75 million for a home in NEOM, with some challenges anticipated for developers due to the high price points expected for properties in these giga-projects.
Despite budget constraints, 41 percent of survey participants said they remained interested in purchasing within the giga-projects and would consider adjusting their budgets accordingly. The average expat budget for a home in a giga-project is SR2.7 million, significantly higher than the average budget for other areas in the Kingdom.
Knight Frank’s report also sheds light on the spending power of millennial expatriates, who have the highest budgets for property investments in the Kingdom’s giga-projects. In contrast, older age groups tend to have more conservative budgets.
Itani concluded by noting the eagerness of high-earning expats to own property within the Kingdom’s ambitious developments, and the importance for developers to offer unique community features and amenities to meet the high expectations of these potential buyers.