Expats Head to Saudi After HQ Rule Change but Face Major Real Estate Shortage
Saudi Arabia’s 2021 mandate requiring foreign firms to establish local headquarters by the end of 2023 or risk losing out on lucrative government contracts has prompted an influx of expats to the kingdom. But the growing pains of this migration have become evident, as the shortage of suitable accommodations has emerged as a major concern among new and incoming residents.
Recognising this demand, several residential real estate projects are already in the works. However, these projects are still under development and will need more time before they are ready for expats to move into.
The Saudi government has committed more than $1 trillion to date into infrastructure projects to cope with this demand, but expats who recently moved to Saudi Arabia have realised finding a suitable apartment has presented itself as a formidable challenge.
Meanwhile, others have opted to embark on their housing hunt once they have moved and have settled in a hotel paid for by their employer for the first month – a common practice among expat workers and consultants in Saudi Arabia.
Property prices have risen significantly in major Saudi cities like Riyadh and Jeddah, making it difficult for people whose incomes have not been adjusted over the years to afford. Despite a recent decline in the number of Saudis looking to buy homes due to affordability issues, the government has a homeownership target of 70 per cent by the end of the decade.
The last time house prices peaked in Saudi Arabia was in 2016, which was when the national transformation plan was launched. Several global issues have occurred since then, the COVID-19 pandemic being the most significant one which led to a decline in house prices globally. But prices have noticeably begun to climb again.
While apartments in Riyadh now cost 4.2 times the annual household income (up from 3.3x in 2016), villas in the city cost 13.3 times as much. Villas in Jeddah, however, have become slightly more affordable since 2016, costing 15 times the annual household income.
