Terminology Guide
Saudi Real Estate Glossary
Master the essential terminology for buying, selling, and investing in Saudi Arabian property.
Appreciation
The increase in property value over time due to market conditions, improvements, or economic factors. Capital appreciation is a key component of total investment returns alongside rental income.
Calculate appreciationAsset Class
A category of investments with similar characteristics. Real estate is considered an alternative asset class alongside stocks, bonds, and commodities.
Branded Residences
Luxury properties developed in partnership with prestigious hospitality or lifestyle brands (e.g., Four Seasons, Trump). Typically offer hotel-style services and premium specifications.
Explore branded residencesBroker
A licensed professional who facilitates property transactions between buyers and sellers. In Saudi Arabia, brokers typically charge 2-2.5% commission plus VAT.
Capital Gains
The profit realized when selling an asset for more than its purchase price. Saudi Arabia currently does not levy capital gains tax on property sales for individuals.
Completion Date
The scheduled date when an off-plan property is expected to be ready for handover. Contracts should specify penalties for delays.
Compound Growth
Growth calculated on the initial principal plus accumulated gains from previous periods. Essential for projecting long-term property appreciation.
Developer
A company that acquires land, obtains permits, constructs buildings, and sells properties. Major Saudi developers include ROSHN, Dar Al Arkan, and Saudi NHC.
View developersDiriyah
UNESCO World Heritage site and major giga-project near Riyadh. Features luxury developments, cultural district, and branded residences.
Diriyah guideDue Diligence
The investigation and verification process before purchasing property. Includes title verification, permit checks, developer history, and financial analysis.
Due diligence guideEquity
The difference between a property's market value and any outstanding mortgage or debt. Represents the owner's actual stake in the property.
Escrow Account
A protected account where buyer payments are held until specific conditions are met. Required for REGA-registered off-plan projects to protect buyer funds.
Foreign Ownership
The legal framework allowing non-Saudi nationals to own property. Rules vary by location, property type, and buyer status (resident vs. non-resident).
Foreign ownership FAQFreehold
Full ownership of both the property and the land it sits on, with no time limit. The strongest form of property ownership available.
Giga-Projects
Mega developments under Vision 2030 including NEOM, The Red Sea, Qiddiya, and Diriyah. Represent major investment opportunities and economic diversification.
Gross Yield
Annual rental income divided by property purchase price, expressed as a percentage. Does not account for operating costs, vacancy, or taxes.
Handover
The process of transferring possession of a completed property from developer to buyer. Includes snagging inspection and document signing.
Investment Property
Real estate purchased primarily to generate income or capital appreciation rather than personal use.
Iqama
Saudi residency permit for foreign nationals. Required for many financial and property-related transactions. Valid iqama is often needed for property purchases.
Leasehold
A form of property ownership where the buyer has rights to the property for a fixed period (e.g., 99 years) but not the underlying land.
Leverage
Using borrowed capital (mortgage) to increase potential investment returns. Magnifies both gains and losses.
LTV (Loan-to-Value)
The ratio of a mortgage loan to the property's value, expressed as a percentage. Saudi banks typically lend 70-90% LTV depending on buyer profile.
Market Value
The estimated price a property would sell for in the current market under normal conditions.
Murabaha
An Islamic financing structure where the bank purchases the property and sells it to the buyer at a marked-up price with deferred payment. Sharia-compliant alternative to conventional mortgages.
Nafaz
Saudi Arabia's national digital authentication platform. Enables legally binding electronic signatures for contracts and official documents.
Najiz
Digital platform operated by the Ministry of Justice for property registration, title verification, and legal services.
NEOM
Futuristic $500 billion giga-project in northwest Saudi Arabia. Includes THE LINE, Sindalah, and Trojena. Major focus of Vision 2030 investment.
NEOM guideNet Yield
Annual rental income minus operating costs (service charges, maintenance, management, vacancy) divided by purchase price. More accurate than gross yield for investment analysis.
Calculate net yieldOccupancy Rate
The percentage of time a rental property is occupied by paying tenants. Key metric for calculating realistic rental income projections.
Off-Plan
Property purchased before or during construction, typically from developer plans or models. Often offers lower prices and payment plans but carries construction risk.
Premium Residency
Saudi Arabia's permanent residency program for high-net-worth individuals. Grants property ownership rights, business establishment, and family sponsorship without employer sponsorship.
Residency guideProperty Management
Professional service handling tenant relations, maintenance, rent collection, and property upkeep. Typically charges 5-10% of rental income.
REGA
Real Estate General Authority, the Saudi government body regulating the real estate sector. Oversees developer licensing, off-plan registration, and consumer protection.
Rental Yield
Annual rental income as a percentage of property value. Gross yield excludes costs; net yield accounts for all operating expenses.
Yield calculatorRETT
Real Estate Transaction Tax, a 5% levy on property purchases in Saudi Arabia. Replaced 15% VAT on real estate in 2020. Payable by the buyer.
Cost breakdownROI (Return on Investment)
Total return on an investment expressed as a percentage. For property, includes rental yield plus capital appreciation minus all costs.
ROSHN
Saudi Arabia's national community developer, building large-scale residential communities. A PIF (Public Investment Fund) company focused on affordable homeownership.
Service Charge
Annual fee paid by property owners to cover building maintenance, security, common areas, and shared facilities. Varies from SAR 15-150/sqm depending on property type.
Shell & Core
A property delivered with basic structural elements and utilities but without interior finishing. Buyer is responsible for fit-out. Common in commercial and high-end residential.
Snagging
The inspection process at handover to identify defects, incomplete work, or items not matching specifications. Defects should be documented and rectified by the developer.
Square Meter (SQM)
Standard unit of measurement for property size in Saudi Arabia. 1 square meter = 10.76 square feet.
Title Deed (صك)
Official document proving property ownership, registered with the Ministry of Justice. Essential to verify before any property purchase.
Turnkey
A fully finished property ready for immediate occupancy. Opposite of shell & core.
Vacancy Rate
The percentage of time a rental property sits empty between tenants. Should be factored into investment calculations (typically 6-10% annually).
VAT
Value Added Tax at 15% in Saudi Arabia. Does not apply to property purchases (RETT applies instead) but applies to services like broker fees and legal costs.
Vision 2030
Saudi Arabia's national transformation program to diversify the economy beyond oil. Driving massive infrastructure development, tourism expansion, and real estate demand.
Vision 2030 guideWafi
REGA's off-plan property regulation program. Requires developers to register projects, use escrow accounts, and meet consumer protection standards.
Yield
The income return on an investment, typically expressed as an annual percentage. For property, usually refers to rental yield (gross or net).
ZATCA
Zakat, Tax and Customs Authority. Saudi tax authority responsible for RETT collection and tax compliance.
Zoning
Government regulations determining how land can be used (residential, commercial, mixed-use). Affects property value and development potential.