Government
There is a population growth of 2% each year uk number for whatsapp across Saudi’s youthful population. The demand for real estate is predominantly made up of low and middle-income households. As such, the government has implemented the likes of the Sakani program of delivering 300,000 housing and financing options. Other initiatives include subsidies morgues, higher loans for mortgages, a mortgage refinancing program (the Saudi Real Estate Refinance Company), fixed rates on long-term mortgages, and a mortgage guarantee program. These are important to consider as the mortgage market makes up 15% of the country’s GDP.
Furthermore, the repo rate was cut to balance out the mortgage market during the pandemic. This has boosted the mortgage market and the value of mortgage loans, the vast majority of which have been government-subsidized. Funding has been primarily attributed to villas, with apartments and residential lots following suit.
Off-Plan Property Purchases
With much development taking place in Saudi Arabia’s real estate market, there are opportunities to invest in off-plan property sales. From the buyer’s perspective, however, there are trust issues regarding the ability to develop homes of quality within the stipulated time. The program which regulates these sales is called Wafi, and it granted several new licenses to sell off-plan units in the last year. These licenses granted well over 100,000 homes the go-ahead, with off-plan unit reprinting about 9% of the residential companies in KSA.
The Wafi program has been put in place to protect buyers and boost buyer confidence in purchasing this kind of real estate. This illustrates the general preference among these real estate investors to buy something they can see and know is ready to move into. It’s all about having tangible properties and ensuring that the Housing Ministry approves the units. Purchasing an off-plan unit that has not been approved can be very difficult, as you would not be able to apply for financial support when making the purchase. It also follows a historical occurrence of developers not delivering off-plan properties as promised, resulting in legal issues.
The trouble is, when purchasing these units, they’re a future investment - only ready to move into in two to three years. These kinds of units are essential for the real estate industry since they provide guaranteed returns on investment. Therefore, transparency and trust between developers and buyers are vital factors that need to be fostered to improve the industry.
At a Glance
There you have it - a guide to real estate investments by Saudi Arabians, both inside and outside the Kingdom. While many expats are looking to move elsewhere, government initiatives and support encourage property purchases within KSA. The key remains to build trust and appealing the desire for quality homes.