Saudi Arabia vies to become next Dubai with property shake-up

Yahoo

6 days ago

Saudi Arabia has taken a fresh step in its bid to become the next Dubai after unveiling a law that will allow foreigners to buy property in its largest cities.
The new regime is expected to begin next January. The details are not yet public, but the opening-up looks to be limited to the capital Riyadh and the port city of Jeddah.
Saudi Arabia has been loosening its conservative social code and pushing its credentials as a sporting, tourism and cultural hub, as it tries to compete for expats and investment with the likes of Dubai, Abu Dhabi and Doha.
'This development marks a significant policy shift,' the law firm BCLP said, adding that it would bolster the country's push, under Prince Mohammed bin Salman's Vision 2030 strategy, to lure foreign investment and deepen capital markets.
James Swanston, an analyst at Capital Economics, said the move echoed policies in the United Arab Emirates and Qatar that had triggered 'an influx of foreign home-owners, particularly in Dubai'.
Saudi Arabia's 2022 census found that about 40pc of the country's 35m population were foreigners, mostly from Asia and the Middle East. There were only about 20,000 Americans and 18,000 from Britain and Ireland, with much smaller numbers from France, Australia, Germany, Spain and Italy.
Recent estimates suggest the UK expat population has grown to nearer 30,000.
That is still a long way behind Dubai, which hosts more than 200,000 British expats, out of a total population one tenth the size of Saudi.
Saudi Arabia, like the UAE, does not levy income tax. But its tighter restrictions on alcohol and women's freedoms have long been a turn-off for Westerners.
The Kingdom may also be targeting wealthy expats from the Gulf and North Africa, as it seeks to become the pre-eminent regional power.
The government will also allow expats to buy in the holy cities of Mecca and Medina, which could attract a Muslim expat clientele, but the purchases will be subject to additional, as yet unspecified, restrictions.
Foreigners are technically allowed to buy property already, although not land. But they must be a resident, the process is cumbersome, there is an upper size limit on the property, and the holy cities are off-limits.
The new rules may have been restricted to Riyadh and Jeddah to try to stop Saudi property prices from rising too quickly.
Residential property prices across the country have jumped by a quarter in the past four years, as demand has outstripped supply. In Riyadh, prices have surged 52pc since 2021.
Saudis' real incomes are barely growing, so the government will hope to avoid following Dubai, where residential property prices have climbed 60pc since 2022, almost doubling in some luxury locales.
Most Western expats in Saudi Arabia tend to have housing provided as part of their relocation package, and would be unlikely to buy houses in the short term.
Estate agents quoted in local media said allowing expats to own houses would encourage them to stay longer, rather than racking up a few years of tax-free salary and then leaving.
Estimates vary widely, but prime residential real estate in Riyadh can cost up to 15,000 rial (£2,900) per square metre, compared with a median of 20,000 dirham (£4,000) in Dubai.
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