With Saudi Arabia, the largest economy in the region, preparing to open its real estate market to international investors, including its religious towns Makkah and Madinah, the competition in the Gulf property market is expected to heat up.
According to experts in the real estate market, the opening of the Saudi market will not only give foreign investors another attractive and secure option, similar to the UAE, but it will also give regional and international developers a chance to diversify their portfolios into a region where the return on investment is significantly higher than in many other major nations that have attained the maturity level.
The regional residential real estate market already has a housing shortage, which will increase investment and drive up prices. By 2022, the GCC nations—led by Saudi Arabia—will be short more than 6 million housing units.
According to Abdullah Alhammad, CEO of Saudi Arabia’s Real Estate General Authority (Rega), the process to let non-Saudis buy property in all areas of the country, including the two holiest places for Muslims, Makkah, and Madinah, is nearing completion. He admitted that the kingdom’s high property prices result from the imbalance between supply and demand, but he stressed that the new law would shortly be issued.
The GDP of the kingdom and the non-oil GDP are roughly 5.1% and 12.8%, accounted for by the real estate industry, respectively.
He continued that foreigners will be able to purchase all types of properties, including residential, commercial, and agricultural ones. However, he reassured that the industry would be watched for unethical behavior and that solutions are being established for such problems.
The Saudi government levied a 2.5% tax on undeveloped land purchased by landowners in urban areas to boost construction activity in the nation and provide more housing.
According to business leaders, Muslims worldwide would show a lot of interest in Makkah and Madinah. At the same time, other tourist destinations like Neom, the Red Sea Project, and Qiddiya will draw more foreign tourists.
The Gulf countries’ opening up of the real estate market will improve the real estate market’s contribution to the region’s total economy and aid the regional government in diversifying away from oil money.
According to pundits, freehold rules would not only benefit residential and commercial buildings but will also hasten the growth of related industries like hotels and amusement parks.
Currently, the UAE leads the area in selecting freehold properties because it pioneered them to the Gulf. Any nationality may purchase property in approximately thirty different districts in Dubai. Similar freehold homes are also available in other Abu Dhabi, Sharjah regions, and other northern emirates. According to the UAE Central Bank, real estate is the sixth-most significant non-hydrocarbon sector, contributing 8.2% of non-oil GDP.
Qatar has 10 locations, and Bahrain has about ten where foreigners can purchase real estate. In some of the Sultanate’s developments, neighboring Oman permits foreigners to own real estate.
The kingdom, which is finalizing its rules, will be the most recent member of the regional bloc to provide freehold property to ex-pats.
