BrazilRich Muslims from around the world to spend big on KSA real estate
High net worth individuals (HNWI) from the Muslim world are prepared to spend $2 billion on real estate in Saudi Arabia’s Holy Cities of Mecca and Medina, according to research from global property consultancy Knight Frank.
In a survey of over 500 rich Muslims from nine different countries, Mecca was noted as the top desired Saudi location for purchasing real estate. The respondents together already own a totally of over 2,250 homes and 29% own three to four properties.
HNWIs are individuals with investable assets of at least $1 million. Knight Frank’s study also including ultra high net worth individuals (UHNWIs), people with more with investable assets of at least $30 million.
Much of the interest from rich Muslims is linked with religion. “The fact that 84% of global HNWIs interested in purchasing property in Saudi Arabia look to one of the Holy Cities underscores the demand for home ownership from outside the country,” said Faisal Durrani, partner at Knight Frank.
In 2023, 1.8 million pilgrims performed Hajj. This is an annual Muslim religious pilgrimage to the holy city of Mecca in Saudi Arabia, which all Muslims are encourage to undertake if they are physically and financially able to. It is one of the Five Pillars of Islam, and involves various rituals commemorating the actions of Prophet Abraham and his family.
“For many Hajj is a life-long ambition, which is intrinsically attached to a desire to visit or live in Saudi Arabia,” said Durrani. “The demand appears to be genuine, with 48% of those looking to purchase a property in Mecca intending to use it as a main residence.”
Indeed, for HNWIs that look to buy properties across Saudi Arabia (not just in Mecca), many (39%) report that they are looking to purchase a main home. The budgets for HNWI home-buyers in the Holy Cities of Saudi Arabia tend to average at around $4.7 million. In Mecca, that average is slightly above $5 million.
Overall, Saudi Arabia is seen as a sound investment for wealthy individuals, with 60% of respondents noting that the country is a “good investment opportunity.” A majority of wealthy home-buyers said they were looking to purchase homes in Saudi Arabia within the next two years.
Cash in king
The Knight Frank report shows that cash is king in the real estate market in Saudi Arabia. A total of 66% of HNWIs said they prefer to pay the full amount upfront when purchasing a property in Mecca.
Saudi cities like Mecca are experiencing a surge in popularity and urbanization, driven by factors such as increased pilgrimage traffic, economic development, and population growth. This growth is leading to rapid infrastructure expansion and the emergence of modern amenities to accommodate the rising demands of residents and visitors alike.
“While the global wealthy clearly have a strong appetite to invest in the Kingdom, the challenge for developers will be to balance the expectations of the global wealthy with domestic buyers,” said Mohamad Itani, partner at Knight Frank.
“For instance, three quarters of those wanting to buy a property in Mecca are interested in apartments, while the desire for apartment living in Medina is even higher at 84%. This is in sharp contrast to Saudi nationals, less than half of whom are interested in owning an apartment.”
