Coldwell Banker Saudi’s CEO on whether foreign real estate buyers show — and when

We've mapped where foreigners can buy real estate. The harder question is whether they will, and when. With the geographic zones now public and the Saudi Properties portal live, the opening shifts from a regulatory question to a commercial one — which buyers, which assets, and how fast any of this converts into transactions. We put that to Coldwell Banker Saudi Arabia CEO Youssef Khattar, who advises the developers and investors now deciding whether to move. Edited excerpts from our conversation:

EnterpriseAM: You advise developers and investors named in these zones. Now that the full map is out, did it land where the market expected, and what caught you off guard?

Youssef Khattar: For Riyadh, 90 to 95% of what developers and investors were expecting is there. Everyone was anticipating the mega and giga projects, like the Red Sea and the transit-oriented developments, and those came through. The good thing is it’s not a final list. If you have a strong project, a full master plan, a prime location, something genuinely unique, you can still get an exception later.

Makkah and Madinah were the real question. We were in doubt about whether they’d allow freehold or a 99-year leasehold. That was critical, because in Masar and other projects in Makkah, developers were taking a real risk without knowing which way it would go. Now they’ve approved 100% ownership for Muslims in specific zones. Honestly, we didn’t expect it to be approved that widely — we thought it would be limited to a few master plans, no more than that.

For the other cities, we don’t expect much foreign interest, apart from expats already living there, and they could buy under the old rules anyway.

E: Qatar, Oman, and the UAE opened up to foreign buyers years ago. What’s the case for Saudi Arabia?

YK: For anyone looking at the GCC, Saudi Arabia is the biggest and strongest economy in the region. Investors from Asia or Europe were already asking, why can we invest in the UAE or Qatar, but not here? Saudi has the largest population, the strongest market, and it sits between the Gulf and the Red Sea. Since Vision 2030 was announced in 2016, they’ve wanted to come in, but the framework wasn’t clear. Now it is.

For investors and developers already in the GCC, from Kuwait, from Bahrain, the appeal is that the demand here is local. The population is small in the UAE or Qatar, so most of the demand comes from foreigners. Here, the biggest demand comes from the domestic market, so there’s less risk. A developer can build and still sell to the customers he already has at home, and at the same time sit on top of that local demand.

E: Which asset classes are foreign buyers actually gravitating toward?

YK: It depends on the city. In Riyadh, individuals want small apartments. They’re building a portfolio because the returns are the highest in the region, and they see a big runway over the next 10 years with everything coming to the city. Corporate investors and developers will build what they already build at home — towers, villas, communities.

For international buyers, the pull is branded residences. We don’t yet have developers with a strong global reputation, so if I'm buying somewhere and I don't know the developer, I want a brand I can trust. People trust the brand, not the developer, unless the developer has a real regional or global presence. That’s where the big potential is for the coming years.

Makkah and Madinah are different. There, it’s hospitality and branded residence, 100% — hotel apartments, serviced residences, studios. Visitors aren’t end users, as they’re not staying long or looking for a villa. They want easy access to the Haram, and that’s it. The Red Sea luxury projects are their own story — very unique, but the supply is so limited that you can’t count on huge global demand there.

E: How fast does foreign capital actually materialize, and what’s standing in the way?

YK: Very soon, I think. Once developers understand what foreign buyers actually want, and how to structure the payments and the transfers and registration around them, things will move. It takes time to set up, but I’d expect to start seeing transactions from September. Over the summer, people are still learning the process. Give it four to eight weeks, and by September foreigners start coming into the market.

Two things to keep in mind. On financing, there’s still no access to finance for foreigners who aren’t residents. I don’t know if that changes later, but for now there’s none, because the goal is to bring in FDI, not to let foreigners buy using local facilities. And on supply, about 90% of what’s available to foreigners now is off-plan. It’s not a ready product you can finance.

Most of the approved zones are still raw land or under design, so it takes at least three to five years, then five to 10. It’s a long-term strategy. We are discussing at Coldwell Banker how to model the supply against this demand, especially for Makkah and Madinah, because we don’t think the coming supply will cover demand in the short term.

E: Riyadh spent the last year on reforms to cool prices and get more housing to Saudis. Does a wave of foreign demand undo that?

YK: If the government had let foreigners own everywhere, without dedicated zones, the impact would be big. Prices would start rising, because sellers would expect demand from every direction. But because ownership is limited to zones, I don’t see a big impact on the local market. Locals buy different products, different units, in different areas.

Where prices will go up is Makkah and Madinah, and only because supply there is limited. That’s the one real driver. Saudis can already own everywhere in those cities, so for foreigners, the price rises only within the dedicated zones. I don’t expect a big impact on local prices or local supply, because the local demand is somewhere else entirely, not in the areas where the new regulations apply.

So in effect, you get two markets: the local market on one side, and the zoned market on the other, on a different price scale and a different supply timeline, almost isolated from each other, and it varies city by city.

GO DEEPER- We mapped the zones themselves, including the Riyadh and Jeddah lists, the Makkah and Madinah projects, who can buy, and the cost stack, in our explainer earlier this week.