29% of Saudi-based expats would like to buy a home in NEOM, according to global property consultancy Knight Frank’s inaugural Destination Saudi report.
This positions NEOM as the most preferred Giga project. Jeddah Central (15%) and King Salman Park (8%), follow in second and third place, respectively.
Knight Frank surveyed 241 expatriates in Saudi Arabia to understand their attitudes, aspirations and appetite towards real estate investment in Kingdom. 56% of this group have resident in the Kingdom for over 10 years and 76% of respondents work in the private sector.
Of those interested in NEOM, 42% are interested in The Line, 19% are interested in Sindalah Island and 10% are interested in Sharma Valley.
Faisal Durrani, Partner – Head of Research, MENA, explained: “Saudi Arabia’s Giga projects represent some of the most ambitious construction ever undertaken and it stands to reason that these new city-sized developments continue to captivate prospective buyers.”
“NEOM has consistently ranked as the most preferred location for Saudi’s eyeing up future home purchases in the Kingdom’s Giga projects and it appears that expats too have been wooed by the planned ultra-futuristic offerings at the Belgium-sized US$ 500 billion super-city.”
87% of expats said they are prepared to spend under SAR 3.5 million. Notably, almost a third (32%) say they will look to spend under SAR 750,000, which may cause challenges for developers as Knight Frank expects that the bulk of stock in the Giga projects will be priced north of US$ 1 million.
When those with a budget of under US$ 1 million were presented with this information, 41% of expats declared that they were still interested in making a purchase in a Giga project and were also are willing to reconsider their budget.
Encouragingly, when asked about the probability making a residential purchase in their most preferred Giga project, 72% of our expat respondents said they will be likely to do so.
SAR 3.2 billion of spending power
Overall, the average expat budget for a home in a Giga project stands at SAR 2.7 million, nearly 58.8% higher than for elsewhere in the Kingdom. Millennial expats (those aged under 35) claim to have the deepest pockets, with average budgets of SAR 4.3 million, nearly twice any potential allocation from 45–55-year-olds (SAR 1.5 million).
Harmen de Jong, Regional Partner – Head of Consulting, MENA explained: Our group of Saudi expats have a total spending power of SAR 570 million, or about US$ 152 million. Scaling this up across Riyadh’s white collar work force, would in theory suggest that dry powder capital worth SAR 3.2 billion (US$ 863 million) is already amassed in the nation’s capital, ready to be deployed.”
Paying for the privilege
When probed on the premia they would be willing to pay for living in any of the Giga projects (compared to a non-Giga project), almost a third (32%) of expats say they would be prepared to pay a premium of 2.5-5% above the prevailing market rate, while 25% indicated that they would pay a premium of less than 2.5%. The average premium expats would be prepared to pay stands at 5.7%.
Most (42%) expats on monthly incomes in excess of SAR 40,000 are ready to pay a premium of 5-7.5%, according to Knight Frank.
Mohamad Itani – Partner, Residential Sales & Marketing Projects, KSA said: “High earning expats are eager to own property in the Kingdom’s Giga projects and the fact that high earners are prepared to spend more on Giga project homes will be welcome news for developers, but the key will be to offer distinctive community features and amenities that go above and beyond. Open spaces and having a park view, for instance tops expats’ wish lists.”
