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As per a report by real estate consultancy Knight Frank, 92% of global Muslim HNWIs are seeking branded residences in Makkah and Madinah
April 03, 2024 | Staff Reporter | KSA | Property Management
92% of Muslim global high net worth individuals (HNWI) are targeting branded residential purchases in the Holy Cities of Makkah and Madinah, according to global property consultancy Knight Frank’s inaugural Destination Saudi report. Knight Frank surveyed 506 Muslim global HNWI from nine countries to understand their attitudes, aspirations and appetite towards real estate investment in the Holy Cities of Makkah and Madinah. Together, the survey respondents own over 2,250 homes, with 29% already owning between three to five properties.
57% of Muslim global HNWI say they are ‘very likely’ to make an acquisition should the right property become available. And 45% are prepared to spend over US$ 10,000 per square metre (over SAR 37,500 per square metre).
Faisal Durrani, Partner – Head of Research, MENA, explained, “Branded residences represent a significant area of opportunity for developers across the Kingdom, particularly given the high budgets among domestic branded residential purchasers. 69% of Saudis are interested in owning a branded residence. Of this group, 19% in Riyadh and Dammam and 13% in Jeddah are prepared spend over SAR 20,000 per square metre. Furthermore, 55% of GCC HNWI are keen to secure branded residences in the Kingdom, with 20% prepared to spend over SAR 32,000 per square metre, underscoring the yet-to-be-tapped potential of the sector in catering to this pent-up demand and driving inward investment into the real estate sector.”
“Clearly, the international wealthy feel the same, however a limited range of branded residences, lack of local financing options and no scope as yet for partial, or time share ownership remain key barriers,” he added.
Knight Frank says the most influential factor impacting the desire of Muslim global HNWI to make a property purchase in a branded residence in either Holy City is the expected ‘high yield and investment potential’ (65%), followed by ‘building maintenance and management’ (54%) and ‘service provision and physical amenities’ (52%).
Being able to secure a reputable managing agency (50%) to manage any branded residential acquisition is the most significant consideration for those targeting Makkah, according to Knight Frank’s research.
“The management of branded residential purchases for the international HNWI should be a central consideration for developers. Remote purchasers will want to have peace of mind that their investments are well looked after and secure in a well-regulated environment.”
Mohamad Itani, Partner – Head of Residential Project Sales & Marketing, Saudi Arabia
Respondents from Indonesia (56%) and Malaysia (47%) value the involvement of an operator in the management and leasing of their prospective purchases more than any other HNWI group. Meanwhile, HNWI Muslim respondents from Singapore (59%), Algeria (53%), Indonesia (52%), and India (50%) expressed a particularly strong preference towards fractional ownership.
A key challenge, according to Knight Frank, is the lack of understanding of true branded residential properties in the Kingdom, but this appears not to be the case for the international wealthy.
Itani added, “The globally accepted definition of a branded residential property is one that is attached to a hotel, usually a luxury operator, with residents gaining full access to all the hotel facilities and amenities: housekeeping, room service, spa/gym facilities, etc.. Encouragingly, it appears that most international Muslim HNWI are familiar with this definition and 61% of those interested in making a branded residence purchase in Makkah prefer hotel-based residences. In contrast, 55% of those interested in branded residence in Madinah prefer retail-based, or luxury-branded residences.”
45% of those interested in branded residences in Makkah value ‘brand identity’, which drops to 38% for those targeting Madinah. Notably, Knight Frank says, of those interested in Makkah with a net worth of over US$ 3 million, ‘brand identity’ ranks second in the list of priorities at 57%, preceded only by ‘building maintenance and management’ (63%).
93% of branded residential purchasers looking at Makkah would like to be involved in the design and layout of their acquisition. The figure is similarly high for branded residences in Madinah (87%).
