Abdullatif Al Shelash Dissects the Art of Saudi Real Estate Deals

No one knows real estate in Saudi Arabia quite like Sheikh Abdullatif Al Shelash. The partner in Alaqtar Real Estate Development Company is a real estate industry thought leader and has been instrumental in spearheading the promotion of collaboration between the private and public sectors in the industry.

Raising funding for Saudi real estate deals, Abdullatif Al Shelash says as a developer, he sees the Saudi market becoming more mature in encouraging developers, especially when it comes to real estate.

“Usually for developers, we bring the concept, not the property,” Sheikh Abdullatif Al Shelash says. “We do the feasibility study. We show an illustrative outlook of what would be really the returns on the project, [internal rate of return], return investments, and all of these numbers.”

Al Shelash says they then assess those figures with associated investors and financial institutions, and raise the funding based on their findings The demand for property in Saudi Arabia’s capital, Riyadh, is strong.

Abdullatif Al Shelash has also been on the mortgage side of real estate deals. The Saudi Home Loans board member shepherded the movement of making mortgages more mainstream in his homeland. 

Saudi Home Loans was the first company in the nation to assist Saudi nationals in buying their home via a mortgage. This company has since gone public. “It was among the first bank and finance companies that was also providing a complete solution,” Al Shelash points out.

Saudi Home Loans was also among the first companies in the Kingdom of Saudi Arabia to promote the concept of home finance. Mortgages only became legal there in 2012, so the area still has a long way to go, according to Sheikh Abdullatif Al Shelash. Gone are the days of having to save up the total amount of money before being able to purchase a property. 

“We can give you a mortgage, and you can actually go and live in your home today,” he explains. 

And Al Shelash notes that he holds mortgages on his own homes because he believes it’s a better use of his money, rather than purchasing a property for cash. Mortgages, in turn, helped the urbanization of Saudi Arabia.

The ability to get a mortgage changed how and where Saudis are living. While at one time, many Saudi citizens were residing in suburbs, home financing has allowed more options to move to cities. And Saudi Arabia is in hyperdrive when it comes to building dream communities of the future — including Neom’s The Line, currently under construction. The vertical city with zero carbon emissions is paving the way for new advances in farming and food technology with the uprising of vertical farming in Saudi, aeroponics, aquaponics, and hydroponics.

According to a report by management consulting service TechSci Research, the Saudi government is shifting away from importing fruits and vegetables and focusing instead on adopting vertical farming practices. To create an incentive, it’s providing benefits like tax exemptions and subsidies, which are projected to fuel the fire for Saudi Arabia’s vertical farming market in the upcoming years. 

The GPS on Where Saudi Real Estate Is Heading

Saudi real estate is going to see a tremendous surge over the next decade as property investors continue to comb through new opportunities there. “Saudi has a lot of potential for the next 10 years … and the next 10 years is going to be the greatest time for [the] Saudi property market,” Realiste CEO Alex Galtsev told Al Arabiya English. “Investors who want to buy real estate understand that if someone committed to invest [that much] in the country, it’s going to be growing.”

Galtsev says property purchases in Riyadh will explode, and predicts that buying 10 apartments there today and just sitting on the investment for five years will lead to 100 to 300 times value growth. 

Projects within Neom, such as Trojena, Oxagon, and Sindalah, are also slated to create a tourism boom for Saudi Arabia, which could affect Saudi real estate in a positive way. 

How Saudi Arabia’s New Law Could Make Saudi Homeowners Better Tourism Ambassadors

Saudi Arabia has a new tourism bylaw allowing Saudi citizens to rent their homes to tourists. Saudi Arabia’s tourism sector has strengthened compared to pre-pandemic international tourism, and by providing exclusive tourist experiences, which are currently under construction, Saudi’s leaders hope to see that number continue to skyrocket. 

Thenationalnews.com reports that last year, the Kingdom saw an increase of 575% in tourism compared with the previous year, with 3.6 million visitors in Q2, according to statistics from the Ministry of Investment. 

The new legal changes could mean Airbnb, HomeAway, and Vrbo could land in the Kingdom of Saudi Arabia. Ahmed Al Khateeb, Saudi Arabia’s minister of tourism, says it’s all part of a larger plan to keep up with the renaissance that’s happening in Saudi Arabia at the intersection of tourism, real estate, and the construction of innovative architectural wonders. Saudi Arabia is also pursuing foreign investors to bank on Saudi Arabia’s accelerated property growth to transform the Kingdom into a bona fide regional business and trade hub. 

Bloomberg.com reports Investcorp Holdings, one of the largest asset managers in the Middle East, is gunning to invest as much as $1 billion in Saudi real estate over the next five years.

Meanwhile, Saudi residents can gain new footing to feed the local economy by investing in their own tourism. 

Under the new law, Saudi homeowners can receive a maximum of three permits issued per property that will be valid for one to three years. It’s also a move some hope will continue to better bridge the gap between the public and private sectors. Saudi Arabia aims to raise the private sector’s contribution to gross domestic product to 65% within the next seven years. 

The shift in mortgages from 25- to 30-year maturity terms is another game changer for Saudi property owners. 

“The mortgage laws have developed, really, the market,” Sheikh Abdullatif Al Shelash says. “The drop of interest rate in the last 10 years has also allowed mortgage companies to really penetrate the markets.”