Dubai property has been and will continue to be one of the most sought-after investment assets for Saudi investors. Since Dubai opened its doors to overseas investment two decades ago, Saudi investors have recognised its potential, making significant investments in the emirate’s property market and the GCC neighbour.
As well as the familiarity, Saudi investors have been drawn to Dubai’s property market due to its strong performance and potential for high returns. With a robust economy and thriving real estate sector, Dubai has consistently ranked among the top-performing property markets globally, making it an attractive investment option for Saudis looking to invest outside of their domestic market.
As Saudi Arabia continues to diversify its economy and implement ambitious initiatives such as Vision 2030, Saudi investors are seeking opportunities beyond their home market.
Dubai’s vibrant economic landscape and growth prospects make it an ideal choice for Saudi investors looking to expand their investment portfolios.
Saudi Arabia’s residential real estate market is experiencing robust growth, driven by strong economic fundamentals and a largely youthful population exceeding 35 million.
The number of new residential units and mortgages continues to rise in 2024, aligning with the country’s ambitious homeownership targets. Visa policy reforms and regulatory changes are expected to further boost direct foreign investment into the real estate sector.
However, private real estate developers in Saudi Arabia face significant challenges, including rising construction costs and competition for financing from other Vision 2030 projects. Despite these hurdles, residential real estate prices and rents are soaring. According to JLL’s KSA Market Dynamics Report H1 2024, Riyadh and Jeddah saw year-on-year sales prices increase by 10% and 5%, respectively, in the first half of 2024. This is similar levels of performance that investors with Dubai property are seeing from their assets.
Knight Frank’s Saudi Arabia Residential Market Review – Summer 2024 reports a 38% surge in the total number of real estate transactions, reaching over 106,700 in the first half of 2024, with total value rising by 50% to USD 33 billion.
Rental yields also remain high, with 9% returns in Riyadh and 4% in Jeddah.
Dubai’s property market also showcases remarkable resilience and growth, attracting significant investment from both local and international investors. It is perhaps this level of maturity of the Dubai market, and the wider diversification of the economy, that makes it the number one choice for Saudi investors looking to diversify their own portfolios beyond their domestic market.
Indeed, for many Saudi investors, Dubai’s appeal lies in its strategic location, advanced infrastructure, and favourable economic policies as much as its world-leading returns.
Saudi Arabia
Dubai
Saudi Arabia and Dubai present unique opportunities and challenges for property investors, each with distinct growth drivers and market dynamics. The strategic initiatives in both regions aim to enhance real estate investment, foster economic stability, and provide attractive returns for investors.
More pertinently, according to the Dubai Land Department (DLD), Saudi nationals invested a substantial AED 7 billion in the UAE in 2017, which made Saudi Arabia the second-largest investor in UAE real estate after India, which invested AED 15.6 billion. Now it is estimated that over USD 15 billion worth of Dubai real estate is owned by Saudi nationals and there are well-established pathways to ownership between the two countries.
This is exemplified by the presence of 20 exhibitors from the UAE among the 50 at Cityscape Jeddah as far back as 2016, while Saudi delegates comprised the largest foreign visitor group at Cityscape Dubai 2017.
The UAE’s close relationship with Saudi Arabia, both politically and economically, fosters an appealing investment climate for Saudi investors. The existing bilateral agreements and cooperation between the two countries facilitate trade and investment opportunities, making it easier for Saudi investors to navigate the Dubai property market.
The close economic ties between the UAE and Saudi Arabia are evident in the significant investments and collaborative projects between the two nations. For instance, the Dubai-based fractional ownership firm Stake is actively pursuing property deals worth USD 266 million in Saudi Arabia, highlighting the strong interest and investment flow from Dubai into the Saudi market. This includes acquisitions like a fully-rented mall in Riyadh and a residential tower with over 140 apartments.
Stake is backed by prominent investors such as Abu Dhabi’s Mubadala Investment Co. and Saudi Aramco’s venture capital arm, further cementing the economic connections between the two regions. The firm has seen “amazing demand” from investors attracted by the potential for capital appreciation and high rental yields in Saudi Arabia.
To further underscore the economic synergy between Dubai and Saudi Arabia, it is notable that in 2022, Saudi Arabia exported USD 8.82 billion worth of goods to the UAE. Key exports included Refined Petroleum USD 2.76 billion), Ethylene Polymers (USD 947 million), and Gold (USD 478 million). Despite a slight annualised decline of 0.47% over the past five years, from USD 9.03 billion in 2017 to USD 8.82 billion in 2022, these substantial trade volumes highlight the enduring economic partnership between the two nations.
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