Recently, the world has witnessed major global economic changes and fluctuations, especially after the Corona virus crises and the Russian-Ukrainian war, which made investors think twice before entering into any new project and risking their capital in any new projects or major investments. With this anxious climate, it is preferable to resort to safe investments especially for those with limited savings.
Real Estate Investment is still the Best Option
There is nothing better than investment in real estate in this changing economic reality, whether residential or commercial, for the purpose of selling (after years of waiting so that the value of the property, its price, and the development of the area grow) or renting, whether to Saudi citizens or expatriates for work or tourism of all kinds. Real estate is known globally as a strong asset that is not affected by inflation factors and currency fluctuations. It also generates a good return in the long term, especially with the development of services and roads surrounding it.
Saudi Vision 2030: Great Ambition and Promising Investment Opportunities
In conjunction with the ambitious Vision 2030 of Saudi Arabia, which attaches special importance to investment of all kinds in general and investment and real estate development in particular, there are promising opportunities awaiting the Saudi or foreign real estate investor, in line with the goals of the Saudi government to increase the volume of real estate wealth and double it to provide the Saudi citizen and resident with a distinguished, upscale, environmentally friendly residence that suits privacy, especially with the great targeted development of religious, cultural and recreational tourism within Vision 2030.
Return on Investment (ROI)
One of the important terms in the world of investment is ROI, or return on investment, which reflects the percentage of profit and its value in the face of the opportunity cost of investing in any other field. In the case of real estate investment, you must study the market, the region, and the type of property well, especially with the large size of the investment, so buying a property is still the largest and most important economic decision in the lives of many, whether to live or invest, sell or rent.
Options Available for Investing in Saudi Real Estate Market
Properties that achieve good investment returns (ROI) vary between residential properties, such as apartments, villas, houses, and palaces, which are allocated for annual or monthly rent to Saudis or expatriates, in addition to commercial properties, such as stores, medical centers, stores, floors, offices, and administrative headquarters, which can be rented to private or government agencies in the Kingdom, and the return percentage varies between each type, as well as the opportunities, advantages, and challenges of each type when investing.
Rate of Return on Investment for Various Properties
Each type of real estate has different costs and requirements and therefore a different rate of return. For example, residential real estate has an annual rate of return on investment between 5%-10%, while commercial and administrative real estate has a higher rate, between 10%-20%.
The value of the annual return and its profitability percentage are determined by calculating the annual rental value and subtracting from it the expenses of maintenance, operation, management, taxes, and various government fees.
Also, the profit rates on the property may increase or even decrease depending on the location of the property, its importance, its finishing, and the advantages it offers to the tenant or owner.
Return on Investment When Selling the Property
Obtaining a good return on the investment resulting from the sale of a property requires waiting for a period of no less than five years in most cases. The property owner must undertake the unit’s maintenance and development so that the property remains attractive to buyers. It is also preferable for the property to be newly built. The value of the return on investment in the case of sale ranges between 10% and 20% and may increase depending on the future of the region and the development of its infrastructure.
Factors For the success of Real Estate Investment
Because the real estate investment decision is the most important decision in your financial life, it is preferable to seek the help of the strong expertise of a real estate agent or real estate investment and marketing company to provide vision and advice, due to his knowledge of the history of the region and its upcoming economic plans and the impact of this on the popularity of its properties.
Aqarmap also offers its extensive experience in the Arab real estate markets to monitor distinctive opportunities and provide advice. The client has the best property, and in general, real estate investment is governed by:
- Supply and demand for real estate by Saudi citizens, expatriates, and visitors to the Kingdom for tourism and entertainment.
- The location of the property and its proximity to services and facilities such as schools, universities, hospitals, commercial centers and clubs, as well as its view of important roads and access to various transportation networks.
- The prevailing economic activity in the region or city in which the property is located and the movement of the local economy are an important factor that will determine the extent of demand and type of tenants for the property (individuals or companies).
- Costs and expenses of purchasing, maintaining, taxes, and managing the property, which vary according to the type, area, type, and region of the property.
Advantages of Real Estate Investment in Saudi Arabia
Through the ambitious Vision 2030 for the future of the Kingdom and the diversification of its economy, it is not limited to oil revenues. There are promising investment opportunities for construction, development and real estate investment in the cities of the Kingdom, which guarantees you:
- Stable and consistent financial return by obtaining a fixed rent as well as increasing the value of the property over time.
- Diversify the investor’s investment and financial portfolio by diversifying his sources of income.
- The increasing value of the property and the land on which it is built, especially with the expanded development in the cities of the Kingdom.
- Protect your financial assets from inflation and market fluctuations.
Aqarmap provides the most important statistics and investment ratios to determine the neighborhood and type of property that achieves the highest investment return