Is Saudi Arabia's Next Growth Story in Holiday Homes?

Saudi market is likely to be receptive to short-stay concepts and could follow in the footsteps of Dubai's booming holiday home market.
Staff Reporter | KSA | Real Estate

Saudi Arabia's hospitality and entertainment sector is showing promising growth potential in the holiday homes market. According to industry sources, the Saudi market is likely to be receptive to short-stay concepts and could follow in the footsteps of Dubai's booming holiday home market.

Demand for luxury holiday homes is expected to be the initial catalyst for growth in the Saudi Arabian short-stay market. In fact, it is likely that demand for leasing luxury holiday homes will increase, which will then expand to include more pricing options. Additionally, short-stay properties aimed at the corporate traveler are expected to gain traction as well.

Vinayak Mahtani, CEO of Dubai-based bnb me, predicts that the KSA holiday home market will be as large as the UAE’s by 2026. He estimates that the luxury accommodation market in Saudi Arabia is worth approximately $5 billion and that homeowners can expect a return on investment of 12-18% by leasing their properties for short-term stays.

However, some industry sources are uncertain about the potential for the Saudi Arabian property market to create a scaled-up holiday home marketplace. The Kingdom is only just starting a massive development of new residential capacity in its major cities. These projects are expected to take another 4-5 years before they are completed for occupancy. Additionally, there is peak demand from Saudi nationals and expats for long-term rentals, which may affect the growth of the short-stay market.

On the other hand, the Saudi Arabian hotel industry is expected to thrive in the coming years. The government has budgeted an estimated $110 billion to deliver on its hospitality vision, which includes various giga-projects located on the mountains or by the sea. The hospitality sector is rapidly becoming one of the key drivers in the transformative vision laid out for the Kingdom. Faisal Durrani, Partner and Head of Market Research - Middle East at Knight Frank, believes that with the evolution of tourist visas, a significant hotel key pipeline, and the emergence of two new national carriers - Riyadh Air and NEOM Air - visitors will have plenty of options to choose from when it comes to identifying travel routes.

In conclusion, the Saudi Arabian hospitality and entertainment sector has the potential to expand into the holiday homes market. While the growth of the short-stay market is not without challenges, the country's massive investment in the hotel industry and other related projects could provide numerous opportunities for the hospitality sector to thrive in the coming years.

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