Real Estate

Expats scramble for housing in Riyadh

June 21, 2024, 5:02 AM

Evening shoppers in downtown Riyadh. A lack of prime residential properties in the city is a growing problem

Prices and waiting lists increase
Riyadh market ‘very volatile’
Rental and ownership pressure

Saudi Arabia’s historic development push – and an influx of foreign professionals looking to play a part in it – is putting the spotlight on a dearth of prime residential properties in the capital Riyadh.

High-quality homes are snapped up, often finding tenants before or within days of getting listed, said Sujith Chandar, Saudi-based Emea relocations manager for Helpxat Relocation.

“The market is currently very volatile due to high demand,” he told AGBI.

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Saudi Arabia’s economy shrunk by 1.7 percent annually in the first three months of this year amid continued oil production cuts, but its non-oil sectors grew 3.4 percent, according to government data.

In 2023 it reported 359 greenfield foreign direct investment projects, a 65 percent jump from the previous year, the latest IMD World Competitiveness Ranking found.

Amid a myriad of financial, construction, hospitality and other projects, the cost of housing across the country rose nearly 9 percent from May 2023 to May 2024.

In Riyadh, the most sought after apartments and villas, especially those in gated compounds, typically have months-long waiting lists for prospective tenants, according to social media posts, websites catering to expats and various anecdotes.

“To my surprise, all reasonable accommodations for couples or families with perhaps only one child, had a waitlist of one year and beyond,” a Reddit user wrote on the online forums platform a month ago.

“I ended up having to take a unit that was way bigger and pricier than expected since I didn’t have the option to delay the move.”

Greg Wright, co-founder and managing partner at recruitment company Food People, said he is placing several executives in the Saudi capital.

“What we are hearing on the ground is the cost of living there is significantly rising and the shortage of rental properties is really, really tough,” Wright told Dubai Eye’s Business Breakfast radio programme this week.

“There are actually waiting lists for flats in key areas for some of the candidates that we are placing, like in KAFD [King Abdullah Financial District].”

The race for the best expat homes is now likely to spill over from the rental to the ownership market.

Seventy-seven percent of Saudi-based expats surveyed by Knight Frank last year for its latest Destination Saudi report said they were considering purchasing a property in the kingdom in one to two years.

“We expect the more the market opens to international buyers, demand for prime properties will continue to rise in Riyadh,” Mohamad Rabih Itani, Knight Frank’s partner for residential sales and marketing projects in Saudi Arabia, told AGBI.

In January, Saudi Arabia launched a visa for foreign owners or investors in domestic real estate that’s at least SAR4 million in value and acquired without any mortgages, among five new residential visa options.

In the first three months of the year, residential transactions in Riyadh registered a 77 percent increase from the same period in 2023, according to CBRE.

Average villa prices in the capital grew 3.6 percent while average apartment prices rose by 8.4 percent, the real estate consultancy found.

Trends in the residential market track similar ones in the office space. There, global companies setting up shop in the Saudi capital to harness its massive growth potential and government push to attract regional HQs are driving up rents and depleting the insufficient supply of Grade A properties.