According to a captivating report from Knight Frank, a leading global property consultancy firm, Global Muslim High Net Worth Individuals have shown interest in owning property in The Holy Cities of Makkah and Madinah.
The report revealed that Makkah is the most sought-after religious destination, with 40% expressing interest in investing there, followed by 20% in Madinah.
Surprisingly, 92% of these individuals want to purchase branded residential units in the holy cities, with an average budget of $4.7 million, and apartments being the most popular property type.
Despite the new 99-year lease restrictions for Premium Residency visas in the Holy Cities, this may still lead to a surge in demand for property, especially with upcoming developments like Masar Makkah and Rua Al Madinah coming to the market.
The Knight Frank Survey Findings
[Image Credit: Rua Al Madinah]
The survey incorporated responses from nearly 506 high-net-worth individuals (HNWI) with a personal net worth exceeding $500,000 from nine countries with significant Muslim populations, including
- Algeria
- India
- Indonesia
- Iran
- Iraq
- Malaysia
- Pakistan
- Singapore
- Turkey
The findings revealed a striking 92% of the respondents showed interest in purchasing property units in the Holy Cities, with 63% in Makkah, 18% in Madinah, and 11% in either Makkah or Madinah.
The demand for real estate in the holy cities is driven by their cultural and religious significance for Muslims worldwide.
From the surveyed respondents, 82% expressed their interest in owning real estate in Saudi Arabia. Specifically, 84% of those interested in buying residential property in Saudi Arabia are focused on the holy cities.
Driving Factors Behind the Investment Trend
According to the survey, the Muslim HNWI's interest in real estate in Saudi Arabia is influenced by the belief that the country offers a lucrative investment opportunity. The results showed that 62% of the respondents in Makkah and 55% in Madinah consider this as a significant factor.
It appears that individuals desiring to own a home in Makkah have a higher financial capability. Approximately 40% of those searching for a property in Makkah have a budget exceeding US$ 5 million, while almost 19% are willing to spend between US$ 1-2.5 million.
In contrast, those interested in purchasing a property in Madinah have an average budget of US$ 4.6 million, with 31% willing to spend more than US$ 5 million.
On average, wealthy Muslims allocate a budget of $4.7 million for residential properties in the holy cities. The combined budget of all 506 respondents amounts to a staggering $2 billion.
Desired Properties Types and Payment Methods
According to the survey, the choices of wealthy Muslims regarding the types of properties and payment methods were revealed.
Regarding property types, the majority (80%) of those who want to purchase a property in Makkah prefer apartments, while the percentage was lower (65%) for Madinah. This differs from the preferences of Saudi citizens, as less than 50% of them are interested in owning an apartment.
When it comes to paying for properties, most prospective buyers in Makkah (66%) and Madinah (54%) prefer to make full payments at the time of the transaction.
This preference for cash payments is even higher among individuals with a higher personal wealth, with 78% of those with a net worth of $3 million or more choosing to pay in cash.
Saudi’s Luxury Branded Residencies Potential
According to the survey, there is a growing interest among wealthy Muslim individuals (HNWIs) in purchasing luxury housing and branded residences in the holy cities of Makkah and Madinah.
The study revealed that a remarkable 92% of the surveyed HNWIs are keen on acquiring branded properties in these cities, with 58% expressing a strong likelihood of doing so.
This demand for branded residences surpasses the current apartment prices in Makkah and Madinah, indicating a considerable market gap for high-end properties with a brand name.
Furthermore, the survey showed that global HNWIs are willing to invest significantly more in branded homes in Makkah, with 39% of potential buyers ready to spend over $10,000 per square meter. This high demand underscores the immense market potential for luxurious branded residences in the holy cities.
Residential Projects in the Holy Cities
Rua Al Madinah
In August 2022, the Rua Al Madinah project, initiated by Crown Prince Mohammed bin Salman, will cover an area of 1.5 million square meters, with a significant portion (63%) allocated for open and green spaces.
This project aims to improve the cultural and historical significance of Medinah and enhance its residents' overall quality of life. It will involve the renovation of 47,000 hotel rooms.
At the same time, it aims to enhance the pilgrimage experience for Islamic pilgrims, with a target of accommodating 30 million Umrah pilgrims by 2030. This project is also expected to generate 93,000 job opportunities, both directly and indirectly, throughout its construction and development phases until 2030.
Planned Hotels in Rua Al Madinah
Accor Hotels
The world's leading hospitality company Accor has revealed to open three properties in the latest project by Rua Al Madinah Holding Company in Madinah, Saudi Arabia. The properties inlcude:
- 142-key Fairmont hotel
- 120-key Fairmont Branded Residences
- 466-key Swissôtel and a 328-key Novotel
Marriott Hotels
Rua Al Madinah Holding and Marriott International have entered into a partnership to oversee 8 hotels within the master plan.
This joint venture is projected to increase the number of rooms by approximately 4,400 and generate 4,100 employment opportunities in Rua Al Madinah, the second holiest city in the Islamic world.
The eight planned properties include
- The Ritz-Carlton, Rua Al Madinah with 151 keys
- JW Marriott Rua Al Madinah with 252 keys
- Madinah Marriott Hotel Rua Al Madinah with 450 keys
- Le Méridien Rua Al Madinah with 533 keys
- The Westin Rua Al Madinah with 361 keys
- Four Points by Sheraton Rua Al Madinah with 777 key
- Aloft Rua Al Madinah and Courtyard by Marriott Rua Al Madinah with combined 1,810 keys
Jabal Omar Development
The Jabal Omar Development Project is a one of its kind project that aims to revitalize the city's urban landscape by providing luxurious accommodations and convenient access to religious, social, and commercial facilities for both visitors and residents of the holy city of Makkah Al-Mukarramah.
Jumeirah Jabal Omar Hotel
The Jumeirah Jabal Omar Hotel, the first hotel in Saudi Arabia from the Dubai-based Jumeirah Hotel group, has been officially announced open in the Holy City of Makkah.
Situated in the second phase of the Jabal Omar development, the hotel is centrally located near the Grand Mosque, Al Masjid Al Haram.
With over 1000 rooms and suites, some with direct views of the haram, the hotel aims to provide exceptional experiences for pilgrims during their Hajj and Umrah pilgrimages.
Address Hotel Jabal Omar’s Sky Musallah
The Address Jabal Omar Makkah, a 5-star hotel, provides a luxurious stay and a variety of amenities in the center of Makkah.
Located only 1640 feet from Masjid Al Haram, guests can enjoy a fitness center, private parking, a shared lounge, and a restaurant during their stay at Address Jabal Omar Makkah,
The Address Hotel in Jabal Omar Makkah has also unveiled its Sky Musallah, the highest prayer room in the world, on a sky bridge.
This impressive prayer room stands at a remarkable 483 meters above sea level and has been recognized by the Guinness World Records.
The Sky Musallah provides breathtaking panoramic views of Al Masjid Al Haram, The Holy Kaaba, and Makkah City.
This sky bridge links the two twin towers of The Address Jabal Omar Hotel, stretching from the 36th to 38th floors, and has a maximum capacity of 520 people. It is an extraordinary observation point for guests staying at this iconic and conveniently located hotel in Makkah.
Masar Makkah
Masar Destination, situated in the heart of Makkah, is a modern integrated investment ecosystem that offers various flexible opportunities.
Its strategic location, only 550 meters from the Holy Mosque and 100 meters from the Haramain Station, makes it a prime development with a total of 24,000 rooms.
These hotels have the capacity to accommodate a large number of visitors, catering to the constantly growing tourism industry in the city.
The main attraction of this project is the Residential Towers, which exemplify the ambitious vision of Masar Destination. In September 2023, Umm Al-Qura announced a partnership with Scope Properties to build Residential Towers in Makkah, with a projected cost of $240 million (SAR 900 million).
Thakker Makkah City
The $7 billion Thakher project has assembled a team of highly skilled urban planners and designers to transform the Holy City's rugged hills into a welcoming and diverse destination that can accommodate 30 million Umrah performers and six million pilgrims by 2030.
Spanning 320,000 square meters and located only 1km from Masjid al-Haram in Makkah, the completed Thakher Makkah will feature roughly 100 land plots designated for various purposes such as hotels, residences, commercial spaces, and service-related establishments.
The development of Thakher Makkah will include a variety of top-rated international hotels, including the Radisson Hotel, Park Inn by Radisson, and the Novotel Hotel. The project will also provide 10,000 car parking spaces and a mosque with a capacity of 5,000 for prayers.
Most Preferred Saudi’s Gigaprojects
The implementation of Vision 2030 has significantly impacted the Kingdom, leading to the emergence of gigaprojects. These developments, including NEOM, valued at $500 billion, and the Red Sea Global project, valued at $23.6 billion, are characterized by their massive scale and diverse purposes.
According to our survey, NEOM is the preferred gigaproject for expats looking to buy a residence, with 24% choosing it as their top choice. This is followed by Jeddah Central with 15% and King Salman Park with 8%.
However, the views of Saudi expats differ from those of global Muslim HNWI, with the latter favoring the Red Sea Project (37%) over NEOM (30%). Jeddah Central (15%) remains the third most popular gigaproject for residential purchases among both groups.
Impact of Saudi Arabia's Vision 2030
The current investment trend aligns with Saudi Arabia's Vision 2030 blueprint, which aims to reduce the Kingdom's dependency on oil revenues and emphasizes top-tier housing for its citizens.
The Kingdom's real estate market is gearing up for significant changes in foreign ownership regulations, notably by introducing 5 new premium residency visa options linked to real estate ownership.
It should be highlighted that the existing regulations on property ownership in Makkah and Madinah only allow for a leasehold tenure of 99 years.
Although the recently introduced premium residency visas do not allow for full ownership, the possibility of a leasehold title for an extended period is anticipated to attract considerable interest from countries with majority Muslim populations.
Promising Future for Saudi's real estate
The survey results highlight the growing investment potential in Saudi Arabia's real estate market, particularly in Makkah and Madinah holy cities. The alignment between this investment trend and Saudi Arabia's Vision 2030 blueprint indicates a promising future for the Kingdom's real estate market.
With the introduction of new premium residency visa options and the potential for luxury housing, the holy cities are set to see a substantial influx of luxury housing, significantly boosting the real estate markets in these cities.
The future indeed looks bright for Saudi Arabia's real estate sector, with high-net-worth Muslims leading the way.
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