Investing in Jeddah real estate market – pros and cons

In the last few years there was a surge in property prices in the whole of Saudi Arabia, and in Jeddah in particular. However, everything indicates that real estate here will see a healthy correction. There are many growths in the labor market that reflect positively on real estate. Also, diversity is rising in the whole of Saudi Arabia which definitely is a good thing. Because of all of these things, investing in Jeddah real estate market seems like a good idea. Especially when you know that government initiatives and development plans encourage this sector.

Diversity enhancements

Saudi Arabia has an idea to diversify away from oil. This is why they increased investment in entertainment, hospitality, and tourism. Many jobs are coming out of deals regarding these things so the need for real estate is higher than ever. Especially in big cities like Jeddah is.

As you can expect there are many chances and opportunities to invest here. New mega entertainment projects are rising every day creating both jobs and housing demand. So if you want, you can even look into home renovation investments and bring the price of your assets even more. Also, cinemas are coming back to Saudi Arabia after 35 years. This is another industry that is expected to be worth a lot in the next few years. Which brings us to the first pro of investing in Jeddah real estate market.

Shopping mall.
Saudi Arabia started investing heavily in the entertainment and tourism industry.

Pro – The price will go only up

We all know that with the demand, comes the rise in price. And that is exactly what we are going to see in Jeddah in the next couple of years, tell us our professionals from Therefore, now is the perfect time for that old stock market mantra that says buy low and sell high. If you buy a property now, with a plan to sell it in a few years, you can be sure that you’ll sell it with the profit. Aditional good thing is that with stocks, you can end up with nothing. However, the value of the real estate will never hit zero, whatever it is.

Con – You need the money to start

Unfortunately, not everything is that easy with real estate. You will need money to start buying properties, and since the country we’re talking about is Saudi Arabia, you will need lots of it. Houses are not cheap here, and the situation is even worse when it comes to big construction projects. It’s pretty similar to working within luxury neighborhoods in Staten Island. You will also need prior approval to buy anything here and that is a thing about which you need to think. 

Pro – You can use the leverage

The power of leverage is something that people often forget about, but it is a fantastic tool for growing your real estate holdings. The principle behind this idea is that you use borrowed capital to purchase and increase the potential return on investment. If you use this properly, it can reduce risk and help you with accelerating your wealth-building results.

Calculator balancing on the table.
Use the leverage in the right manner when investing in Jeddah real estate and you can make a lot of money.

Con – It’s a long term investment

You can’t buy a real estate in Jeddah and expect it to be a short term investment with a quick turnover. You’ll need to come up with a long-term strategy. You may even need to relocate to Jeddah, at least for some time during the construction or renovation. Luckily, making your local move cheap and fast is possible here. When everything is done, renting is always a good idea as many companies are trying to expand to this market. Some time is needed to sell a property, so don’t expect that you will be able to get cash from this if you need it quickly.

Pro – You can have a steady cash flow from real estate in Jeddah

If investing in Jeddah real estate market is done right, and you opt for renting it, you can make a steady income called the cash flow. This is all the money that is left after all the bills are paid and you can use it for whatever you like. It’s a passive income, meaning you don’t really have to do anything to still get it. This leaves you enough time to concentrate on other things and expanding your business.

Con – Problems occur often in real estate

There are many things that can go wrong with real estate. The most common problem causers are tenants. You can lose both money and valuable time dealing with them. Typical problems are tenants that don’t pay, leave the property in bad condition, or even both. This can mean that some things, like the kitchen appliances upgrade, will have to wait sometimes.

All of these things can mean additional trouble if you’re living out of Saudi Arabia. Although, many people succeeded in the real estate market in Jeddah by having good and reliable managers on the spot. 

Pro – It gives you control

Real estate investments give you a lot more control than any other type of investment. You are the guy that decides about many things regarding your business and there’s nothing that can outshine that feeling when you make a deal that brings you a lot of money. And all of that thanks to your good work. It is a competitive market, but if you can withstand long enough, you can succeed.

man talking about investing in Jeddah real estate.
In real estate, you’re in complete control of everything you do.

Con – It takes time to learn everything

You will need to spend a lot of time reading and learning about managing your investments. The learning curve is steep, and you can lose a lot of money if you don’t get your things right. Also, if you move to Jeddah, expect that the actual managing of the buildings will take its’ portion of a day.

Therefore, investing in Jeddah real estate market can be a good idea, but only if you know what you’re doing. If you’re a beginner or you just want to try yourself in the real estate market, try to be a little bit more modest.

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