Real Estate Investment: Safe and Profitable Options
The Saudi Arabia Kingdom has found lately that the Saudi real estate wealth represents a major opportunity and a significant economic tributary that can achieve growth for the Saudi economy for both individuals wishing to invest as well as Saudi and international real estate development companies.
Saudi Arabia was willing to implement its vision after the end of the Corona virus crisis, and many Saudis believed that real estate investment is the safest option among the available options, especially since real estate investment does not require a lot of experience and knowledge of the market, its mechanisms, and customer segments. All that is required is to buy a residential, commercial, or administrative property with good specifications in an area with good real estate demand, and of course these choices are largely determined by the budget you have.
The forms of real estate investment vary between direct and simple investment through purchasing various properties and renting them or doing what is called flipping (when someone buys a property, holds onto it for a short time and then sells it (the flip part) for a higher price).
Real estate investment is not limited to renting and selling apartments and units, and even going beyond that to provide hotel accommodations for those coming to the Kingdom for religious or cultural tourism or for work. There is also another form of investment through investment funds and projects of the Saudi Ministry of Housing.
Feasibility and Real Estate Return On Investment (ROI)
In order to decide to engage in any kind of investment, you must first calculate the profit, return, and financial future of your investment. This becomes more important in light of waves of inflation, changing exchange rates, and the high price of gold and precious metals. It is best to choose an investment with a regular and good return that rewards inflationary changes.
Economists and investors calculate 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.
Real estate investment does not only guarantee a monthly or periodic return and income from rent or from investment funds, but also that the price of the property increases, which guarantees the value of your capital and saves it from the complications of inflation.
Launching the Saudi Housing Program in 2018
In 2018, Saudi Arabia Kingdom began implementing its largest housing program, which aimed primarily to increase the supply of residential real estate of all types, with distinctive quality and design, and reasonable prices. The Kingdom aims to facilitate home ownership for Saudi citizens, whether for housing or investment, and also the Saudi program aims to increase Saudi families’ ownership of real estate to 70% of Saudi real estate volume by 2030.
Investment Opportunities in Saudi Housing Projects
Through Vision 2030, the Kingdom of Saudi Arabia aims to expand its economic inputs beyond oil and its projects by increasing internal Saudi wealth and investments, of which the Saudi real estate sector comes to be number two after oil, its refining, and its revenues. The Kingdom seeks to increase Saudis’ ownership of residential real estate units instead of being limited to renting, which will have an impact on Saudi real estate companies and Saudi citizens alike.
The Most Important Real Estate Projects from the Ministry of Municipal, Rural Affairs and Housing
The Saudi government has worked to facilitate the development of land and real estate projects that provide various residential properties. The Ministry of Municipal and Rural Affairs and Housing has implemented several projects and partnerships, such as development housing projects, which ensure the participation of the Saudi community side by side with government bodies.
The Saudi government is working to build an appropriate environment to provide an innovative real estate environment and contribute to building residential real estate that meets market needs, balances supply and demand, and provides promising investment opportunities for real estate developers, landowners, and financing parties.
Learn more about Sakani Project in the Kingdom of Saudi Arabia
Sakani program is one of the most prominent real estate programs in Saudi Arabia, which aims to provide housing for more than a million Saudi families. Many Saudi real estate development companies participate in the program. Saudi citizens also can invest in these real estate companies by purchasing shares and contributing to the Saudi stock exchange, which offers many shares of real estate companies.
The Saudi government has made great efforts to regulate the real estate market and facilitate real estate financing with the aim of enabling the Saudi citizen to buy his own home and not just live in a rented house, which will increase Saudi real estate wealth. One of the most prominent activities and measures implemented by the Kingdom is Sakani program, which began in 2018.
The most important goal of the Sakani program is to increase the supply of diverse residential properties with high quality and appropriate prices in a short time to increase the real estate wealth of the Kingdom.
The Saudi government has worked to simplify the regulations that help own property. The Saudi Vision 2030 aims to increase the percentage of family ownership to 70%, and increase supply in the market.
So far, more than one million Saudi families have benefited from the Saudi program to enable Saudis to buy a house, Sakani program. Saudi Arabia also launched the electronic “Ejar” service, which preserves the rights of tenants, by granting real estate owners and landlords notarized contracts that preserve the rights. During the program, Saudi Arabia succeeded in registering more than 4.5 million
The success of the Sakani program exceeded expectations and stimulated the Saudi real estate market and had an impact on the program attracting developers and partners in the private sector, to help provide solutions to those searching for housing that meets their needs in all regions of the Kingdom.
Various Investment Options
A good option for real estate investment is investment funds and real estate funds, which are considered a sophisticated and more professional form of the usual real estate investment in which real estate is purchased and rented to individuals or companies. Real estate funds and investment funds may be suitable for those with medium capital who want to obtain a greater profit.
What are mutual funds?
An investment fund is a financial cooperation and partnership between several individuals in which money and specific shares are shared to be invested in investment activities in various fields, including real estate investment. These funds generate a fixed income and profits are distributed to investors according to their financial share.
There are many Saudi investment funds in the Kingdom that provide different economic solutions between real estate and commercial investment, etc.
What distinguishes real estate investment funds is that they do not entail risk, which is suitable for those with savings who do not want to enter into projects that require experience and understanding of the market, marketing, and business management. You can consult experienced real estate companies to suggest to you the best funds and real estate investments that suit your goals and capital.
Principles for Choosing the Best Real Estate Funds
In order to choose the best real estate investment, it is preferable to seek the expertise of experienced real estate marketing companies, most notably Aqarmap, which has in-depth experience in the Arab real estate markets and uses modern studies to measure market trends, customer demand, and preferred rental locations.
The best and most successful real estate investment is characterized by the following:
- Selecting Saudi regions and cities with high demand from Saudis, expatriates, and visitors to the Kingdom for religious tourism (Mecca and Medina) and festival tourism, cultural and recreational tourism (Riyadh and Jeddah).
- The property’s location and its proximity to services and facilities such as schools, universities, hospitals, and commercial centers.
- The strength of the company that owns investment funds and real estate funds and its experience in the Saudi market.