Real Estate Viewed as a Safe Haven For Investors & Home Buyers

Recent findings by internet-based market research firm YouGov, reveal that real estate is the most appealing investment category for 53% of respondents who consider Saudi Arabia as one of the most attractive markets for investment in the Middle East.

The latest research from the Middle East Real Estate Barometer report, reflects the market sentiment of 684 investors and home buyers from the GCC and Egypt who consider Saudi Arabia among the top three countries for investment in the Middle East, 78% of whom also plan to purchase a residential, commercial or retail property in the next 12 months.

The study also found that nearly half (47%) of respondents are considering an aggressive investment strategy in the coming year.

Despite uncertainties and the oil price decline over the last two years, the YouGov report paints an encouraging picture of the sentiment of investors and home buyers who are enthusiastic to invest in real estate in KSA. The analysis shows that nearly two-fifths (39%) of Saudi Arabia’s residents expect growth in the Kingdom’s real estate market in the coming year.

The positivity can be attributed to comprehensive government reforms, introduced earlier this year, when the Kingdom added a barrage of proposals under Saudi Vision 2030, aimed at overhauling the economy in an effort to wean itself off oil. The Vision aim to transform the Saudi economy into a powerhouse led by the private sector, which the real estate industry forms an integral part of.

The YouGov findings come ahead of the 7th edition of the Jeddah Urban Development & Real Estate Investment Event, powered by Cityscape, which takes place from November 2nd to the 4th at the Jeddah Centre for Forums and Events, owned by the Jeddah Chamber.

Hosted under the patronage of His Royal Highness Prince Misha’al bin Majed bin Abdulaziz, Governor of Jeddah, the Event offers a crucial platform for national and regional players to speak to these investors and home buyers and ultimately shape the growth curve of Jeddah's real estate market.

 “YouGov’s analysis illustrates the vast real estate potential the Kingdom has, especially in light of the measures the government is taking to diversify away from oil-related revenues,” says Mr. Hussein AlHarithy, Vice Chairman and Managing Director of National Exhibition Co., organisers of the Jeddah Urban Development & Real Estate Investment Event. “The broad bid to reshape the Kingdom’s economy, under its National Transformation Program (NTP) and Vision 2030, has been met with overwhelming support as the government begins to develop industries like real estate and tourism. Taking this into consideration, it’s unsurprising that the respondents in the survey are positive when it comes to the real estate sector in the country.”

When considering real estate as an investment, the analysis points out that Saudi Arabian residents look at capital appreciation (75%), return on investment (74%), and investor protection (70%) as the most appealing factors. Overall, respondents who are interested in investing in Saudi Arabia rate value for money (85%) and quality of properties (84%) as the most important factors they seek when buying a residential property.

Commenting on the findings, Kailash Nagdev, Managing Director for YouGov in the MENA region said: “With real estate still being the most attractive asset class for investors in the GCC and Egypt and real estate prices softening, most investors are looking for properties with potential capital gains and high end user demand to achieve high rental yields. It is therefore crucial that real estate developers tailor their offering with the right amenities and financial packages to stand out with an attractive long term investment value.”

Over the next year these driving factors will form part of the real estate investment dialogue, especially on the back of objectives from the government to increase the property sector’s contribution to the country’s GDP from 5% to 10% by 2020, the equivalent of USD 74.8 billion.

Under the new objective, both the public and the private sector are encouraged to take a role in ensuring the growth of the property sector, either through individual initiatives or forming public-private partnerships (PPP), a topic which will be discussed at the Event’s workshop on November 2nd.

“By adopting more PPP models the Saudi government would see the creation of economies of scale, which would help keep prices low/affordable,” says Jamil Ghaznawi, JLL Country Head for KSA. “In addition, faster development from experienced developers with units of consistent quality will shorten the lengthy waiting list. Mid to long term, PPPs should lead to improved public services and financial gains for the government by freeing resources which could be reinvested into existing affordable housing schemes.”

Notably for property developers, the YouGov report reaffirms the belief that location is crucial when end-users decide on investing in the real estate market. Respondents seek residential properties that are in close proximity to educational facilities (45%), healthcare facilities (38%), followed by place of work/ business (37%), and place of worship (37%).

To know more about Jeddah real estate, join key exhibitors at this year’s Event. Exhibitors include: King Abdullah Economic City, Jabal Omar Development Co., Lifestyle Developers, Schon Properties, Danube Properties, Al Marjan Island, Kleindienst, Dar Al Tamleek, Tamimi Pre Engineered Buildings, Tilal, Sloanes Real Estate Brokers KSA, Select Global Development, Artar Real Estate Development, Saudi Hollandi Bank, Sobha LLC, Green Valley Real Estate, Barcode Ltd, Banke International Properties, Tiger Group, Rawae Al-Umran Real estate Development co., Real Estate Progress Pivot and many others.