This visa is attracting major investment opportunities among Muslim global high-net-worth individuals (HNWI) and as the city is a holy place of Makkah and Madinah it is assumed that investors are prepared to spend $1.96bn.
According to the Knight Frank Survey, approx. 506 high-net-worth individuals from 9 different countries have shown their interest in investing in the holy cities of Saudi Arabia. Nearly 30% are quite positive about real estate investment in Makkah, and 25% show their interest in Riyadh similarly 19% choose Madian.
Knight Frank’s recent findings closely coincide with the government’s unveiling of new premium residency options in January, including visas linked to property ownership.
Faisal Durrani, partner-research head of MENA, stated: “1.8 million pilgrims perform Hajj during 2023. For many, this is a lifelong ambition, intrinsically linked to the desire to visit and/or live in Saudi Arabia.
“The fact that 84 per cent of global HNWIs interested in buying in Saudi would like to do so in one of the holy cities underlines the depth of the pent-up demand for home ownership from outside the country.
“And the demand appears to be real, with 48 percent of people looking to buy property in Mecca intending to use it as a main residence”.
Herman de Jong, MENA regional partner-consulting head, said: “The new premium for property owners is a welcome step by the visa authorities. “Demand is likely to increase at a time when changes in affordability and residential market demand dynamics, driven primarily by a greater desire to rent rather than own among young intra-Saudi expatriates, are slowing the level of deal activity. Used to be.
“In fact, nationwide residential sales volume was down 16 per cent last year”.
Knight Frank says the total number of real estate transactions in Saudi Arabia across all asset classes year-on-year declined by 17 per cent through 2023, while the total value of all deals declined by 9 per cent.
According to Knight Frank, Muslim global HNWIs budget for the holy cities on average $4.7 million. 40 percent of those considering Mecca are willing to spend more than $5 million.
Nearly 80% of HNWI has expressed their interest in investing in Saudi Arabia as the city enjoys some major factors such as investment opportunities, cultural significance and rapid decision-making timelines which makes it a promising destination for investment.
Mohamad Itani, Partner – Head of Residential Project Sales and Marketing, Saudi Arabia, said: “While the global wealthy clearly have a strong appetite to invest in the Kingdom, the challenge for developers will be to balance the expectations of the global wealthy with domestic buyers.
Well, investors are quite optimistic about investment and capital growth in the holy city and expect returns between 6%-10% annually. While developers may face short-term challenges in delivering any project’s prices as per the current economic cycle of the country.
So, in sum, by introducing premium visas Saudi Arabia has positively impacted the real estate of the city and simultaneously it will create opportunities for global investors to invest here.
