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High Net Worth Muslims Ready to Spend $2 Billion In Real Estate Investments in Holy Cities
High Net Worth Muslims Ready to Spend $2 Billion In Real Estate Investments in Holy Cities

A fascinating report by the Global Property Consultancy Firm, Knight Frank has revealed demand for property ownership in The Holy Cities of Makkah and Madinah amongst Global Muslim High Net Worth Individuals.

The report showed that Makkah was the most popular religious destination, with 40% interested in buying in Makkah, followed by 20% in Madinah.

Interestingly, 92% plan to acquire branded residential units in the holy cities with an average budget of $4.7 million, with apartments being the most popular property type.

Although new Premium Residency visa options restrict ownership to a 99 year lease in the Holy Cities, it may still fuel a boom in property demand with developments such as Masar Makkah and Rua Al Madinah soon to become to market.

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The Holy Cities: A Prime Real Estate Destination

Image Credit Rua Al Madinah

The survey targeted 506 Muslim High Net Worth Individuals (HNWI) from nine countries with significant Muslim populations, including

  • Algeria
  • India
  • Indonesia
  • Iran
  • Iraq
  • Malaysia
  • Pakistan
  • Singapore
  • Turkey

With a net worth exceeding $500,000, these respondents expressed a strong interest in acquiring branded residential units in Makkah and Madinah holy cities. 

In fact, an astounding 92% of the Muslim HNWI stated their intention to purchase property in these prestigious locations, 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. 

For many, owning a property in Makkah or Madinah is a lifelong dream associated with the desire to visit and live in Saudi Arabia. This sentiment was reflected in the survey, with 84% of the Muslim HNWI interested in purchasing property in Saudi Arabia specifically targeting the holy cities.

Drivers for Real Estate in Saudi Arabia

The survey revealed that the demand for real estate in Saudi Arabia among Muslim HNWI is driven by the perception of the country as a good investment opportunity, with 62% of respondents indicating this as a key factor in Makkah and 55% in Madinah.

It seems that those who have their eyes on owning a home in Makkah have a greater financial capacity. Around 40% of those seeking a property in Makkah have a budget of more than US$ 5 million, while almost one-fifth (19%) are willing to spend between US$ 1-2.5 million.

In comparison, respondents interested in purchasing a property in Madinah have an average budget of US$ 4.6 million, with 31% willing to spend over US$ 5 million.

On average, Muslim HNWI allocate a budget of $4.7 million for residential property in the holy cities. The total allocation by all 506 respondents amounts to a staggering $2 billion. 

This substantial international demand underscores the potential for real estate investment in Saudi Arabia, particularly in Makkah and Madinah.

Preferred Property Types and Payment Methods

The survey also shed light on the preferences of high-net-worth Muslims when it comes to property types and payment methods. 

In terms of property types, 80% of those interested in buying a property in Makkah expressed a preference for apartments, while the figure was at 65% for Madinah. This contrasts with the preferences of Saudi nationals, as less than half of them are interested in owning an apartment.

When it comes to payment methods, the majority of potential property buyers in Makkah (66%) and Madinah (54%) prefer to pay the full amount at the point of transaction. 

The inclination towards cash payments increases with personal wealth, with 78% of those with a net worth of over $3 million opting for full cash payments.

The Potential Branded Residences in Saudi Arabia

The survey highlighted the potential for luxury housing and branded residences in the holy cities of Makkah and Madinah. A staggering 92% of the surveyed Muslim HNWI expressed eagerness to purchase branded properties in the holy cities with, with 58% ‘very likely’ to do so.

This appetite for branded residences far exceeds the current apartment prices in Makkah and Madinah, indicating a significant market gap for high-end branded properties.

Global HNWI are willing to commit substantially more for branded homes in Makkah, with 39% of potential buyers ready to invest over $10,000 per square meter. This demand highlights the significant market potential for high-end branded residences in the holy cities.

Property Developments in The Holy Cities

Rua Al Madinah

Image Credit Rua Al Madinah

The Rua Al Madinah project, launched by Crown Prince Mohammed bin Salman in August 2022, spans 1.5 million square meters, with 63 percent dedicated to open and green space.

Image Credit Emirate of Madinah Province Twitter

This project will encompass 47,000 hotel rooms to uplift Medinah’s cultural and historical legacy while enhancing its inhabitants’ overall quality of life. 

Image Credit Rua Al Madinah

Simultaneously, it seeks to enrich the pilgrimage experience for Islamic devotees, aiming to accommodate 30 million Umrah pilgrims by the year 2030.

Moreover, it is expected to create 93,000 direct and indirect job opportunities, allowing recruitment throughout the construction and development phase until 2030.

Planned Hotels in Rua Al Madinah

Accor Hotels

Image Credit Rua Al Madinah

The leading world’s hospitality giant Accor has announced its plans to launch three properties in the new development by Rua Al Madinah Holding Company in Madinah, Kingdom of Saudi Arabia. These properties will include

  • 142-key Fairmont hotel
  • 120-key Fairmont Branded Residences
  • 466-key Swissôtel and a 328-key Novotel

Marriott Hotels

Image Credit Rua Al Madinah

Rua Al Madinah Holding and Marriott International have agreed to manage 8 hotels in the master plan. This collaboration is expected to add approximately 4,400 rooms and create 4,100 job opportunities in the second most sacred city in the Muslim world, Rua Al Madinah.

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-a-kind initiative focused on revitalizing the urban area to offer high-quality lodging and facilitate religious, social, and business amenities and resources for both tourists and inhabitants of the sacred city of Makkah Al-Mukarramah.

Jabal Omar is home to several 5 star hotels including The Address and Jumeirah Makkah both of which offer branded residences.

Jumeirah Jabal Omar Hotel

Image Credit Jumeirah International

The Jumeirah Jabal Omar Hotel in the Holy City of Makkah, the first hotel in Saudi Arabia by the Jumeirah Hotel group from Dubai, has been officially announced to be open. 

Image Credit Jumeirah International

Located in the second phase of the Jabal Omar development, the hotel is positioned in the heart of Jabal Omar near the Grand Mosque, Al Masjid Al Haram

Image Credit Jumeirah International

Featuring more than 1000 rooms and suites, some offering direct views of the haram, the hotel strives to offer extraordinary experiences to pilgrims on their Hajj and Umrah journeys.

Address Hotel Jabal Omar

Image Credit Jabal Omar Development Company

The 5-star Address Jabal Omar Makkah hotel provides a luxurious stay, dining options, and other amenities, making it a spiritual sanctuary in the center of Makkah. Just 1640 feet away from Masjid Al Haram, the hotel offers a fitness center, private parking, a shared lounge, and a restaurant for its guests.

Image Credit Jabal Omar Development Company

The 5-star Address Hotel in Jabal Omar Makkah has also revealed Sky Musallah, the highest prayer room in the world located within a sky bridge

Standing at an impressive 483 meters above sea level, it has earned a Guinness World Record. The Sky Musallah offers stunning panoramic views of Al Masjid Al Haram, The Holy Kaaba, and Makkah City. 

The sky bridge connects the two twin towers of The Address Jabal Omar Hotel, spanning the 36th to 38th floors, and has a capacity of 520 people. It is a remarkable lookout point for guests staying at this iconic and centrally located hotel in Makkah.

Masar Makkah 

Image Credit Masar Makkah

Located at the heart of Makkah, Masar Destination is an advanced integrated investment ecosystem that offers a variety of flexible opportunities. 

Image Credit Masar Makkah

Strategically positioned only 550 meters from the Holy Mosque and 100 meters from the Haramain Station, this development boasts a total of 24,000 rooms, these hotels have the capacity to host a large number of visitors, catering to the continuously expanding tourism industry in the city. 

Image Credit Masar Makkah

The centerpiece of this project is the Residential Towers, which showcase the ambitious vision of Masar Destination.

In September 2023, Umm Al-Qura announced a collaboration with Scope Properties to construct Residential Towers in Makkah, a project worth $240 Million (SAR900 million).

Thakker Makkah City

Image Credit Thakher Makkah

The Thakher project, a $7 Billion project, boasts a team of top-tier urban planners and designers, transforming the rugged hills of the Holy City into a highly accessible, diverse, and hospitable destination, which aims to host 30 million Umrah performers and six million pilgrims by 2030

Image Credit Thakher Makkah

Spanning 320,000 square meters and situated just 1km from Masjid al-Haram in Makkah, the completed Thakher Makkah will feature approximately 100 land plots designated for hotels, residences, commercial spaces, and service-related establishments. 

Image Credit Thakher Makkah

The Thakher Makkah development features a range of renowned global hotels, such as the Radisson Hotel, Park Inn by Radisson, and the Novotel Hotel.

The project will include a capacity of 10,000 car parking spaces and a mosque that can hold 5,000 people for prayer.

Most Sought After Saudi’s Gigaprojects

Image Credit Killa Design

One of the most notable effects of Vision 2030 has been the rise of gigaprojects throughout the Kingdom. These projects, such as NEOM worth $500 billion and the Red Sea Global project worth $23.6 billion, are defined as large-scale developments with various uses.

Inquiring about the gigaprojects in which expats would prefer to purchase a residence, NEOM stands out as the top choice with 24%, trailed by Jeddah Central with 15% and King Salman Park with 8%.

Unlike Saudi expats’ views, the global Muslim HNWI we polled favors the Red Sea Project (37%) ahead of NEOM (30%). Jeddah Central (15%) is the third most popular gigaproject for residential purchases.

The Saudi Vision 2030 Blueprint

Image Credit Saudi Arabia Premium Residency

The survey findings align closely with the Saudi Arabian government’s efforts to attract international investments and promote economic diversification through its Vision 2030 initiative. This initiative aims to reduce the country’s dependence on oil revenues and focuses on various sectors, including real estate.

To facilitate foreign investments, Saudi Arabia has introduced 5 new premium residency visa options that are linked to real estate ownership. 

However, it is important to note that current ownership laws restrict property ownership in Makkah and Madinah to a 99-year leasehold basis. 

While the new premium residency visa options do not permit outright ownership, the prospect of a long-term leasehold title is expected to generate significant purchasing demand from Muslim-majority nations.

The Future of Growth in Saudi Arabia’s Holy Cities

As the demand for luxury housing and branded residences in Makkah and Madinah continues to grow, developers can meet the needs of high-net-worth individuals seeking prestigious properties in these sacred locations. 

With the potential for substantial returns on investment and the allure of cultural and religious significance, the real estate market in the holy cities of Makkah and Madinah is poised for significant growth in the coming years.

Keep Reading: Diriyah Company Launches First Luxury Ritz-Carlton Residences in Riyadh

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