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The rise of branded residences in Saudi Arabia

69% of Saudi households aim to own a branded property, indicating the attractiveness of the market segment

The rise of branded residences in Saudi Arabia

Branded residences are emerging as a significant segment within Saudi Arabia’s real estate market, driven by a confluence of factors such as economic growth, shifting consumer preferences, and ambitious urban development projects. Hence, we explore the rise of branded residences in Saudi Arabia, and how the market has evolved over the years.

Why are branded residences a good investment in Saudi Arabia?

Branded residences have witnessed exponential growth globally, and Saudi Arabia is no exception. With the Middle East accounting for 10% of the total number of branded residential developments globally, the region’s stake in the luxury real estate market is evident. This trend reflects the increasing demand for properties associated with well-known brands, as discerning buyers seek exclusivity and quality assurance in their home purchases.

Forecasts predict a 120% increase in the number of branded residences in the Middle East by 2030, underscoring the confidence placed in the region by developers and investors alike.

The allure of branded residences lies in their unique blend of exclusivity, quality service, and premium lifestyle amenities. Owners not only benefit from the association with reputable brands but also enjoy concierge services, exclusive benefits, and a sense of community among like-minded neighbours.

The evolution of the branded residences market in Saudi Arabia

In Saudi Arabia, the branded residences market has witnessed a significant evolution in recent years, presenting lucrative investment opportunities. According to our 2023 Saudi Report, 69% of Saudi households aspire to own a branded residential property, indicating a substantial untapped market. This trend is further bolstered by the inclusion of branded residential stock in various gigaprojects across the Kingdom.

The growing population of high-net-worth individuals (HNWIs) in Saudi Arabia is a key driver of demand for branded residences. Between 2022 and 2024, the number of HNWIs in the Kingdom increased from 122,784 to 134,539, according to our 2023 Wealth Report. The introduction of the Premium Residency Visa scheme has attracted international investors to the Kingdom’s real estate market, particularly in holy cities such as Makkah and Madinah.

Recent developments, such as the launch of Ritz Carlton and Corinthia branded residences within the Diriyah project, highlight the Kingdom’s strategic shift towards premium residential offerings. These initiatives reflect the increasing alignment of gigaprojects with the preferences of affluent investors seeking branded properties.

92% of wealthy Muslims seek branded residences in Saudi’s holy cities

The appeal of branded residences in Saudi’s holy cities extends beyond local demand, attracting attention from global wealthy Muslims. According to our report, Destination Saudi 2024, 92% of global wealthy Muslims are seeking branded residences in Saudi’s holy cities, driven by factors such as expected high yield and investment potential, building maintenance and management, and service provision and physical amenities.

The introduction of the Premium Residency Visa scheme has further incentivised investment in branded residences, as affluent individuals seek to secure residency privileges through property ownership. This trend underscores the growing international interest in Saudi Arabia’s real estate market, particularly in locations with religious significance.

What do buyers look for?

Buyers of branded residences prioritise factors such as quality, exclusivity, and investment security. They seek assurance that their investments are well-maintained and managed within a regulated environment. Associating a property with a reputable brand not only enhances its prestige, but also ensures access to premium amenities, and professional management services.

Opportunities and challenges

Navigating the world of branded residential properties has been tricky due to misunderstandings about what they offer. Branded residences, typically associated with luxury hotels, provide residents with access to hotel amenities like housekeeping and room service.

Operating and maintaining branded residences in Saudi Arabia pose significant challenges, despite the growing number of HNWIs in the region. Saudi Arabia has witnessed remarkable growth in its population of ultra-high-net-worth individuals (UHNWIs), with a staggering 227% increase over the past five years, marking the fastest growth rate globally. In 2020 alone, 617 new UHNWIs were added, bringing the total count to 7,020.

Over the period from 2020 to 2025, the HNWI population in the country is projected to rise by 20%, reaching 287,115 individuals. Saudi Arabia’s population of UHNWIs, with assets exceeding $30 million, rose by 17% in 2022. This number is expected to continue growing, with a projected 10.4% increase by 2024.

Expats are also showing a strong interest in owning branded residences, especially millennials and high earners. Many are ready to buy within the next few years, indicating a significant demand. Developers have a great opportunity to meet this demand by introducing more branded residential options. They could consider offering shared ownership or collaborating with banks to offer mortgages, as many expats are willing to spend up to $400,000 (SAR 1.5 million). Luxury vacation spots, like the Red Sea Project, are already incorporating branded residences into their plans.

On a concluding note

Branded residences represent a lucrative investment opportunity in Saudi Arabia’s evolving real estate market. With the backing of supportive government initiatives, a growing population of high-net-worth individuals, and increasing international interest, branded residences are set to thrive in the Kingdom’s luxury property segment. By capitalising on the allure of renowned brands and delivering premium living experiences, developers can unlock the full potential of branded residences in Saudi Arabia.