Majority of Saudi tenants planning to buy property within five years - report

Properties below $260,000 are most preferred asset to invest in

Image used for illustrative purpose. A view shows buildings and the Kingdom Centre Tower in Riyadh, Saudi Arabia, January 1, 2017.

Image used for illustrative purpose. A view shows buildings and the Kingdom Centre Tower in Riyadh, Saudi Arabia, January 1, 2017.

REUTERS/Faisal Al Nasser

Pent-up demand for affordable housing in Saudi Arabia remains huge, and the majority of tenants in the kingdom have plans to become homeowners over the short term.

A recent housing survey conducted by Knight Frank found that nearly six in ten people (56 percent) who are currently renting in the kingdom are looking to buy a property sometime during the next five years.

These potential buyers, however, prefer to shift into affordable homes that would set them back less than 1 million Saudi riyals ($266,000).

“Demand for properties below 1 million riyals is highest,” Knight Frank said in its report released on Thursday.

Knight Franck’s Saudi Arabia National Housing Survey highlights the residential demand preferences of owner-occupiers, tenants and those sharing a home with their families across Saudi Arabia’s major cities.

The survey was designed to determine if there is a gap in supply and demand in the market.

Little change

The Gulf state’s property market is considered one of the largest in the region, underpinned by a growing population that’s dominated by young cohorts.

Over the last 50 years, the kingdom’s population ballooned by more than 520 percent, while its urbanisation grew from 49 percent to 84 percent, according to Taimur Khan, associated partner and head of research at Knight Frank Middle East.

An estimated 58 percent of the citizens is also below the age of 30. Despite the current backdrop, there’s been “very little change” in the nature of housing supply in the state, according to Khan.

In its report, Knight Frank said, the majority of housing stock in the kingdom is centred towards large villas on the periphery of Saudi Arabia’s major cities. The available supply, however, is beyond the  reach of most potential buyers.

“This type of product is one which the new demographic cohort will struggle to afford or have any desire to occupy,” Knight Frank said.

What Saudi residents want

Among those surveyed by Knight Frank, 51 percent currently live in an apartment. A bigger number, however (61 percent), are looking to acquire a villa when they find the chance to move.

It is estimated that only a third of the market still retain a preference for apartment living.

There’s also huge preference to acquire housing prior to competition, with 62 percent of the potential buyers saying they would be likely or very likely to purchase an off-plan property.

When asked what they would want to have in a property, the respondents said the most important home feature they’re looking for is a garden, followed by modern design.

(Writing by Cleofe Maceda; editing by Seban Scaria) 

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