Ownership Apartments… The Pros and Cons (3-2)
A Closer Look at Apartments for Sale in the Kingdom

* The history of apartment ownership is not new to Saudi society
* The absence of regulations governing the size, location, design, and security and safety standards of owner-occupied apartments

Riyadh - Amlak
The widespread availability of apartments for sale throughout our beloved Kingdom following the issuance of the executive regulations for the Real Estate Unit Ownership and Classification System has led many investors to prefer constructing buildings with divided units to suit those seeking ownership units based on their low income.. As a follow-up to our report in the previous issue, in this report we will provide you, dear reader, with an overview of the reality of apartments offered for sale throughout the Kingdom.

The History of Ownership Apartments
Apartments offered for ownership are not new to the Saudi real estate market, but what is new is their widespread availability as low-cost residential units in residential neighborhoods in major cities following the issuance of the regulatory regulations, as this type of ownership was common in the cities of Makkah and Madinah in areas near the Two Holy Mosques. The emergence of this type of ownership was a necessity due to the high prices per square meter in these areas and the desire of many to own property near places of worship, whether for commercial, residential, or investment purposes. Ownership apartments were also available in coastal areas, particularly in private resorts overlooking the Red Sea or the Arabian Gulf in the Kingdom’s coastal cities such as Jeddah, Al-Khobar, and Dammam. Owning these sea-view apartments (chalets) was an added perk for high-income earners.
Availability of Listed Apartments
Upon a closer look at the apartments on offer, we note that the buildings containing units for sale vary in type, ranging from residential towers located on major, prominent streets to small buildings scattered among homes in various residential neighborhoods.Additionally, some units are still being offered in high-rise towers with magnificent sea views, while others feature a private beach within the (chalets). These freehold apartments are widespread across all cities in the Kingdom, particularly in major cities where the cost per square meter is high, such as Riyadh, Jeddah, Al-Khobar, and Dammam. We also find them to a lesser extent in vibrant cities like Taif, Jazan, Hail, and the cities of Al-Qassim.
Size of Available Apartments
The sizes of the apartments on offer vary; some are small, containing two bedrooms and two bathrooms, in addition to a living room, kitchen, and guest room, and some may include a dining room. Most of the apartments listed have three bedrooms in addition to living rooms, while those with four or more bedrooms are rarer; some of these apartments also include a small room designated for a maid. Most of the apartments on the market are single-story, but two-story apartments have recently begun to appear, and a few of them include a private rooftop for each apartment.
The average size of apartments starts at 120 square meters and can extend to 300 square meters or more for those that are more luxurious in terms of construction, finishes, or location.
Prices of Freehold Apartments
The price of these apartments varies depending on the city they are located in, their location, size, and the features they offer. Generally, prices for these apartments start at an average of 250,000 riyals and can exceed 1.5 million riyals for apartments in strategic locations or those featuring amenities such as a gym, a swimming pool, and security personnel.
After-Sales Services
For the apartments offered in high-rise buildings or those in strategic locations, the developer provides management, maintenance, and cleaning services and ensures the installation of emergency exits and safety equipment in the common areas of the apartments for a modest annual fee. However, in general, the developer does not provide any after-sales services to buyers of freehold apartments, which are commonly found in buildings no taller than three stories and scattered among houses in residential neighborhoods.  Generally, for most of what is on offer, the developer provides a warranty on finishes and construction for a number of years, which may reach five years. Furthermore, the majority of these apartments lack any safety features such as emergency exits or even fire extinguishers.
The Purpose of Buying Apartments
Most apartment buyers are small families with fewer than six members, and they purchase these apartments for residential purposes. A small number of investors buy freehold apartments for investment and rental purposes. Most buyers are Saudi nationals, though there are a small number of foreign owners.
Sale and Financing
The sale and purchase of freehold apartments are subject to the Executive Regulations of the Real Estate Unit Ownership System issued by Cabinet Decision No. 40. Most apartment purchases are financed through bank loans secured by salary, but this type of financing is expected to decline following the issuance of a financing decision by the Real Estate Development Fund, which allows citizens to apply to the fund and use the financing to purchase an apartment provided that its size does not exceed 250 square meters and no more than seven years old. Some large companies offering these apartments provide financing options, but the majority of apartment developers are mid-sized investors who do not offer this service.
Widespread... but haphazard
Given the scarcity of land in the Kingdom’s cities and the low average income of individuals—factors that have influenced the beliefs and lifestyles of many Saudi families and investors—the proliferation of owner-occupied apartments has become inevitable.. Some large-scale investors have already moved to build high-end owner-occupied apartments with organized after-sales services, including security, maintenance, and cleaning teams, while prioritizing safety. Many mid-sized investors also seized this opportunity, capitalizing on the demand by constructing buildings no taller than three stories containing owner-occupied apartments. Consequently, these apartments have sprung up haphazardly along major streets in residential neighborhoods. The implementing regulations did not specify any restrictions regarding size, number of rooms, design, or safety standards for the construction of these apartments, resulting in many of them being built haphazardly and appearing unattractive to potential buyers. Furthermore, the regulations do not require investors to provide
guarantees to buyers or essential services such as construction and finishing warranties or maintenance and cleaning arrangements.. Furthermore, their proliferation in residential neighborhoods without regulations governing exterior or interior design, building locations, lot size, or the availability of ample parking has become a nuisance to homeowners and has led to overcrowded neighborhoods, and has led many middle- and low-income individuals to shy away from purchasing, preferring to rent rather than buy.
Stay tuned for our next issue for exclusive coverage of Saudi citizens’ views on condominiums—what they see as positive aspects of these units and the ownership system, as well as what they consider essential but currently lacking.