The residential real estate market in Saudi Arabia is one of the most attractive globally with capital city Riyadh topping the list followed by Jeddah and Dammam, according to a report by Derayah Financial.

Saudi-based Derayah Financial is the first investment supermarket in the Middle East to offer all investment alternatives under one roof.

The company said its comprehensive and pioneering research on real estates revealed that the residential real estate in these three Saudi cities were among the most attractive when compared to other cities in the world.

Derayah has developed a new method for evaluating global real estates prices in the research.

It compares real estate's prices in 50 major cities around the world by taking the average price for a sq m of residential properties and comparing it to the average income of the inhabitants of these cities, thus calculating a new metric for each city: AAI (Area Afforded by Average Income of Inhabitants).

When taking this new AAI metric into consideration, the report concludes that residential real estates in Riyadh, Jeddah and Dammam are among the most affordable in the world.

This is a good indicator that residential properties in the Kingdom are still attractive comared to other cities the company said in a statement.

When using the AAI metric, Indian city of Mumbai becomes the most expensive in the list of cities due to the high price of the residential square meter when compared to the average income of the inhabitants of the city.

The average annual income of an inhabitant of Mumbai can buy only 0.38 sq m of real estate property. Moscow, Hong Kong, London, Singapore follow as the next most expensive cities on the list.

On the other hand, the report states that Saudi cities such as Riyadh and Dammam, and some other cities such as Zurich, Cairo and Copenhagen are among the most attractive because the average annual income of inhabitants in these cities can buy more than 8 sq m of residential property.

Therefore, these cities offer the best value and the highest potential for capital appreciation, and for generating income from real estates investments, the report added.

Commenting on the report, Mohammed El-Kuwiz, Derayah’s managing director, said the real estate is an important part of investors’ portfolio both in the Kingdom and in the Gulf.

'But due to the nature of real estates investments, it’s hard for the individual investor to evaluate and analyse their efficiency as an investment class especially when adding the complexities of the current turbulences in world economy,' El-Kuwiz explained.

'This report is an effort by Derayah to offer individual investors all the necessary tools that help them make their own enlightened investment decisions,' he added.

According to him, Middle East saw similar divergences, with residential apartment prices in Riyadh, Saudi Arabia witnessing a 6 per cent year-on-year increase, compared to still falling prices in places like Dubai.

From a rental yield perspective, the report states that Latin American countries like Peru and Brazil seem attractive when compared to the global peers. Regionally, Egypt and Jordan offered the highest rental yields between 7 to 8 per cent, El-Kuwiz added.

The comoany chief clarified that Derayah’s report analysed the markets taking into consideration the residents’ ability to afford real estates in each city.

'The report presumes that the more the residents become able to buy properties the higher the potential for adding value to the property and the higher the chance to achieve profit from investing in real estates,' he added.-TradeArabia News Service