_Show me the money
An interesting disparity between the aspirations of tenants and the reality of their finances has been a common thread throughout Survey 1.
We initially learned that most tenants (48%) have a budget of between SAR 750,000 and SAR 2.2 million (US$ 200,000 – 600,000) for their first home purchase. In a surprising contrast, the new build property types that have been identified as the most highly sought after by this group are villas (30.2%), followed by three- and four-bedroom apartments at 24% and 18.1%, respectively.
“44% of homeowners want to buy a second home”
Ambition and reality creating an interesting market dynamic
Over a third (35%) of tenants nationwide said their budgets were representative of their total expected spend, rather than being representative of just a down payment. Average two-bedroom apartments in Riyadh, of a good quality, sell for over SAR 750,000, while three- or four-bedroom villas usually sell for in excess of SAR 2.3 million, highlighting the discrepancy between tenants’ ambitions and market realities.
51% of tenants are also looking for developers to offer financing options, with this view echoed across the country.
Further evidence of the financial reality for would-be first time buyers is also reflected in the fact that 39% expect to be offered payment plans that stretch beyond handover. This reality is even more prevalent amongst millennials (those aged between 18-35), with 63% of tenants in this cohort looking for post-handover payment plans.
Second home buyers’ appetite
For homeowners looking to snap-up another home, 49% say the main motive will be for investment purposes, with yields topping the list of specific investment considerations. A further 44% say it will be for themselves and their families, hinting for the first time at the substantive size of the Kingdom’s second homes market.
This group also had a higher share of those whose budgets would be representative of their equity contributions (46%), suggesting that not only is there a growing appetite for second homes, but that there is growing demand for luxury second homes in the Kingdom.
Discover the full Saudi Arabia Residential Survey 2022