When we talk about buying foreign real estate for the Saudis, the first thing that comes to mind is the city of Dubai, the state of Egypt and Turkey for a large segment of citizens, but as we know, these transactions have produced for us multiple experiences, both positive and negative, that can be used as good lessons for those who plan to buy a new residential property in a foreign country. .

If you are planning to own a property in a foreign country, before that you are supposed to ask / ask yourself an important question, which is: What is the purpose of owning the property? Is it for housing or for investment?

What is the purpose of owning the property? Is it for housing or for investment?

An important question to ask before buying a property

To be clear, you can plan to own the property in the foreign country for housing but you cannot use it at the same time for investment! It is simply due to the considerations related to the period of holding the property, so owning it for housing is for a long period of more than 10 years, and often for the retirement period, while owning it for investment is for a period of less than 10 years, and its main motive is often to achieve a capital return within a limited period.

You intend to own the property in a foreign country for housing

Many Saudis fall into the trap of language or religion when they think about choosing a specific foreign country to own real estate to live in, believing that the appropriate option is for the country that speaks Arabic or follows the Islamic religion, so they own property in the foreign country without doing the necessary study of the legal, political, economic environment and infrastructure He falls victim to his goodwill.

For example, many of those who own real estate in order to live in Gulf, Arab, or Islamic countries are now facing difficulties in dealing with real estate management and its various expenses, and dealing with various legal disputes, in addition to currency fluctuations, which greatly affected the value of their real estate in these countries. foreign countries. Not to mention that some of these countries hate foreigners in general, and some of them may hate Saudis and Arabs specifically, even though they are also Muslims!

When you plan to own real estate in order to live individually (non-institutionally) in a foreign country, make sure at the outset that it is in one of the developed countries such as the United States of America or the countries of the European Union, in order to reduce the risk of your loss of the property completely, as these countries are characterized by stability in their political environment And legal and economic in the long run. In addition, its real estate markets mostly follow a recognized law such as the civil or English law, and the level of transparency in it is high, allowing you to study it and predict its future in a good way.

After that, you can choose the language and religion that you see fit in order to learn and adapt to it. When you plan to live in foreign (non-Muslim) countries, it is good to learn new skills and knowledge that make your life more fun and challenging and keep you and your family in permanent youth. (If you prefer Muslims, there is nothing more beautiful than living in Saudi Arabia).

Among the preferred non-Muslim countries for living are the countries whose people are distinguished by a mixture of the Christian or Jewish religion. Unlike what we see in foreign films and series, the customs and traditions of the Christian and Jewish people of the country are very close to the good customs of Muslims, so it is good that the housing you own falls between them in order to reduce the risks to yourself, your family and your property, and it remains your mission to attract them with the teachings of your tolerant Islamic religion.

The most important of all is that the cost of living is parallel to your current and post-retirement income, and you must also calculate the expected necessary expenses for the maintenance and management of the property, including the lawyer that you will hire, maintenance and construction companies, and the periodic fees that you will pay, whether to the authority supervising the property or fees Various government taxes that can include annual taxes on assets can sometimes reach 3% of the value of the property. (Countries with asset taxes above 5% are likely to be uninhabitable.)

Finally, you are supposed to develop an additional plan to reduce the expenses of real estate ownership, whether that is by temporarily leasing the property when it is not in use, or investing a value similar to the value of the property in Saudi government bonds with an annual return of greater than 3%, or owning the real estate unit It is part of a conglomerate of a homogeneous group of Saudi individuals in order to share in the expenses and also to benefit from the strength of the group during negotiations with the seller of the real estate units that are planned to be owned. You intend to own the property in a foreign country for the purpose of investment

You intend to own the property in a foreign country for the purpose of investment

Many individuals make the mistake of believing, when they own a foreign property for housing, that they can allocate it for investment as well, confusing the principle of saving and investment, so they fall into the trap of loss as a result of high personal costs such as effort and time and the increase in the amount of expenses necessary to manage the property for investment.

When you buy a property for personal residence, you will not need a company that supervises the maintenance and cleaning of the property, and you will not need a lawyer to help you in drafting and applying rental contracts and reviewing the courts when disagreeing with other parties, and you will not need to pay additional fees to the municipality, and you will also not need other work related to renting the property, for this Your expenses will be very limited.

But once you think about investing in real estate, you must plan for all the works and their expenses mentioned in the previous paragraph. And if you decide to carry out the tasks of these authorities personally, it will be a futile adventure that will expose you to many troubles and mistakes that will cost you a lot. The laws related to the real estate sector in foreign countries are more complex and developed than what we have in Saudi Arabia.

In general, for the individual direct investment process to be in foreign real estate, the value of the investment portfolio is supposed to exceed the level of 10 million riyals in order to cover investment expenses appropriately and to diversify the real estate portfolio in order to reduce risks. Investment expenses can range from 1 to 5% of the portfolio, including non-reimbursable expenses called in English (Sunk costs), which include evaluation, examination, inspection, and so on.

It is more appropriate to invest in foreign real estate through real estate investment traded funds called REITs or Real Estate Investment Trusts, which are available through many different international financial brokerage companies and can be entered and exited easily and at limited costs compared to direct investment in foreign real estate, and their annual returns can be Reach more than 100% within five years. (See table below for a list of the performance of 166 US REITs for past years.)