With the recent economic crises and global difficulties linked to the corona virus crisis and the Ukrainian-Russian war, and the subsequent waves of inflation and slowdown in the economy, which is due to the problems of exchanging goods and importing and exporting products, it was necessary to resort to good investment alternatives that are far from risk.
Those with savings always search for safe financial investments that do not require extensive experience in the market, commercial transactions, business theories, marketing, and also do not require a large amount of time for supervision and management. Here, real estate investments of all kinds stand out, which guarantee you access to what is known as fixed passive income (the revenue generated with minimal effort or active participation such as , investing capital in a project managed by others, or buying a property and renting it annually or monthly), and not only that, the investment you spend in the property guarantees you the value of your money and preserves it in the face of inflation, and the currency price changes, and here real estate investment is superior to investing in bank savings, which provide a monthly or annual profit, but the value of the money is fixed.
Real estate investment in buying and renting apartments provides additional income. It also does not require much effort other than collecting the rent and following up with the tenant in the event of a need for maintenance or renovation of the property, if necessary. Your property can be rented to an individual or company in order to use it for housing, commercial investment, or for tourism and hotel purposes such as renting apartments per day for visitors to the Two Holy Mosques or those coming to the Kingdom for tourism or quick work visits.
Types of Real Estate Investment
There are various forms of real estate investment that vary according to financial goals as well as the available capital. Among the forms of real estate investment available in the Kingdom of Saudi Arabia:
- Buying real estate and apartments for the purpose of renting them annually or daily and obtaining a fixed return.
- Real estate flipping is the purchase of an old, unfinished, or even new property in a non-populated area, finishing and preparing it, then selling it at a reasonable price with the high price per square meter in the area.
- Real estate investment in commercial and administrative properties (which offer a higher return on investment than residential).
- Investing in real estate investment trusts and real estate mutual funds.
- Purchasing lands, building them, and developing real estate projects on them.
All of these investment types vary according to the available capital as well as the risk involved in the activities. For example, activities that require large investments and work effort after construction and development involve some risk or challenges.
Return on investment in real estate (ROI)
One of the important terms that an investor must know before starting real estate investment is the return on investment (ROI), by subtracting the initial cost of the investment from its final value, then dividing this new number by the cost of the investment, and finally, multiplying it by 100.
The return on investment related to renting residential apartments, which amounts to 10%, is less than the rent of commercial and administrative units, which reaches 15%, although renting apartments is easier and faster than getting a client to rent a shop or office. Also, these investments have a different time frame and period. For example, rental contracts for shops, companies, and offices are longer than apartments, especially with the availability of various types of real estate and the ease of moving around.
The Most Important Saudi Cities with a High Demand for Renting Residential apartments
Choosing a location is the first step to successful investment and reaching better clients. Some Saudi cities are witnessing high demand and are cities inhabited by a large number of residents or visited by expatriates for the purpose of tourism or work. Among these cities are:
Riyadh
Riyadh is the Saudi capital and the most important and largest political and economic center in the Kingdom. It also has the largest population density in the Kingdom and witnesses a diverse demand from Saudis as well as expatriates for tourism and work.
Riyadh includes old residential neighborhoods and distinctive new ones that include various properties, including apartments, villas, and compounds.
The capital, Riyadh, has important institutions and landmarks that make the city sought after for residential, administrative, and commercial rent. One of the most important Saudi institutions is King Khalid International Airport, the most prominent international airport in the Kingdom.
Jeddah
As the Saudis say, the city of Jeddah is different! Yes, the city is a port and a coastal city and also has the same population as Riyadh. Jeddah is the preferred city for expatriates coming to work because of its diverse commercial and administrative companies and institutions, which guarantees you access to diverse clients.
Jeddah has a distinguished location in the west of the Kingdom of Saudi Arabia on the Red Sea coast. Jeddah includes an important and major international port for exporting non-oil goods and merchandise, which has made Jeddah a center for the Saudi financial and economy.
Also, the city of Jeddah is a tourist and coastal city, especially the Corniche area, where residential real estate or chalets are witnessing a great demand for rent from Saudis.
It is recommended before starting a real estate investment, even if it is small, to resort to the experience and knowledge of a trustworthy real estate agent. Aqarmap provides various consulting services that facilitate your choice of the best investment areas in the Kingdom according to your budget and goals.