Abdulaziz Al-Issa: There are (invisible) financial burdens caused by tenant consumption that fall on the landlord's head
Salem Al-Qahtani: Rental returns to the investor between 4%-6% are not feasible and are not considered profits
Riyadh-Mohammad Al-Amin Jamous
The major cities in the Kingdom are undergoing radical changes in their real estate map, as a result of urban expansion and the injection of major strategic projects, in addition to the announcement of the strategy of some cities that included qualitative leaps, for example, we expect the population of Riyadh to jump to 20 million people by 2030, and become one of the top 10 economic cities in the world.
These changes will coincide with the development of the idea of real estate investment, which stimulates the enthusiasm to build different villas and apartments to invest them and face this population influx whose features are beginning to appear.
These changes will coincide with the development of the idea of real estate investment.
The newspaper “Amlak Real Estate” asked important questions about Investment in residential rent:
1- Feasibility of residential rental investment?
2- What is the percentage of the annual rent from the cost of buying or building the property?
3. What are the risks to the rental market?
Alissa: Many considerations for a successful lease
<Mr. Abdulaziz Al-Issa, Editor-in-Chief, stressed the importance of tight thinking and many considerations in (calculating the leased property), pointing to the burdensome maintenance costs after the tenant leaves, especially that new tenants demand to repair what the previous tenant's consumption has spoiled, which throws financial burdens on the owner (invisible), so the annual rental value should increase from 7%, and Al-Issa gave an example; if an apartment is purchased for one million riyals, especially if it is linked to financing, it is not reasonable to be rented for 70,000 riyals..! He considered it a risky venture with unintended consequences. <Al-Issa explained that real estate investment is not only an annual profit-making process; it is a complex process in (long term), such as sufficient time to recover the capital, and like other activities is subject to economic variables with multiple cycles per year, especially if the purchase or construction relies on bank financing, which also has high costs The editor-in-chief of “Amlak” concluded that some owners do not have enough time for investments that need daily follow-up, so their only option is to rent their properties, which is (a safe investment) if it is scientific and studied, but often the wealth in the beginning does not collect from rental returns, which are considered the lowest in the world of investment.
Qahtani: Rental yields are weak
On the same topic, real estate expert Salem Al-Qahtani, CEO of Al-Bayt Al-Ateeq Real Estate Development and Investment Company, confirmed that with the pace of rising rents in some areas, and the increase in the number of family members over time, the citizen wishing to settle down by buying his home in the way that suits him for the purpose of housing and stability, pointing out that the returns of rents for the investor fall between 4%- 6% He explained that large residential complexes are the most feasible from the economic point of view, explaining that the management of residential complexes is the easiest in terms of follow-up due to the presence of the owners' union that seeks to solve all the issues of the residents, and at the same time keen on maintenance that increases the life of the property and extends its life span and increases the opportunities to benefit from the popular spaces by leasing or exploitation in increasing the income of the owners and maintaining the building and representing the role of the residents before the relevant authorities.
<Al-Qahtani explained that investing in one apartment or villa is a kind of capital preservation, especially for retirees or inherited property that the owners want to preserve.
