A worked example comparing an off-plan purchase under a Wafi payment schedule with buying a completed unit, showing how delay changes which is cheaper.
An off-plan unit in Saudi Arabia is usually cheaper than a completed one, but the buyer pays in instalments for months or years before receiving anything. The discount has to compensate for the return lost on money paid early and the rent not received while waiting. The worked example below compares the two with illustrative figures and shows how a delay can reverse the result.
The situation
A foreign investor eligible to buy in a permitted zone is choosing between an off-plan apartment under a Wafi-licensed project and a similar completed apartment nearby. Handover of the off-plan unit is scheduled in 30 months.
Assumptions (illustrative)
- Off-plan price SAR 1,000,000, paid 10% at booking, 20% at months 8, 16 and 24, and 30% at handover in month 30.
- Completed apartment price SAR 1,080,000, paid now, earning net rent of SAR 55,000 per year.
- Return on cash elsewhere: 4% per year, simple interest for clarity.
- Transaction tax and fees left out of both sides to keep the comparison on timing.
- Delay case: off-plan handover moves to month 42.
Step 1: Opportunity cost of the payment schedule
SAR 100,000 for 30 months: SAR 10,000. SAR 200,000 for 22 months: about SAR 14,667. SAR 200,000 for 14 months: about SAR 9,333. SAR 200,000 for 6 months: SAR 4,000. Total: SAR 38,000.
Paying early has a cost even though no single invoice shows it.
Step 2: Off-plan position at handover
SAR 1,000,000 plus SAR 38,000 equals SAR 1,038,000 at month 30.
This is the true cost of the off-plan unit when it is ready.
Step 3: Completed unit position at month 30
Opportunity cost: SAR 1,080,000 multiplied by 4% multiplied by 2.5 equals SAR 108,000. Rent: SAR 55,000 multiplied by 2.5 equals SAR 137,500. Net: SAR 1,080,000 plus SAR 108,000 minus SAR 137,500 equals SAR 1,050,500.
The completed unit costs more upfront but earns rent from day one.
Step 4: Compare on schedule
SAR 1,050,500 minus SAR 1,038,000 equals SAR 12,500 in favour of off-plan.
On time, the off-plan discount of SAR 80,000 leaves only a small advantage after waiting costs.
Step 5: Off-plan with a 12-month delay
Extra waiting on SAR 700,000 already paid: SAR 700,000 multiplied by 4% equals SAR 28,000. Position: SAR 1,000,000 plus SAR 38,000 plus SAR 28,000 equals SAR 1,066,000 at month 42.
Delay adds cost to every instalment already paid.
Step 6: Completed unit at month 42
Opportunity cost: SAR 1,080,000 multiplied by 4% multiplied by 3.5 equals SAR 151,200. Rent: SAR 55,000 multiplied by 3.5 equals SAR 192,500. Net: SAR 1,038,700. Completed unit ahead by SAR 27,300.
A one-year delay turns the off-plan advantage into a disadvantage.
What changes the answer
- A larger off-plan discount increases the margin of safety against delay.
- Payment schedules weighted toward handover reduce the opportunity cost.
- A higher return on cash elsewhere makes early payments more expensive.
- Higher rent on the completed unit strengthens the case for buying ready.
- The quality and specification at handover may differ from the completed unit you compared.
What the numbers tell you
- Compare off-plan and completed units on total cost at the same date.
- Include the return lost on instalments and rent not received.
- Test a delay case before committing, and read the delay clause.
- Pay only into the Wafi escrow account named in the contract.
Limits of this example
Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.
Domira works with foreign investors on the property side of entering Saudi Arabia: finding land or premises, due diligence, design, construction and asset management. For licensing, tax and legal steps, work with a licensed adviser; we coordinate with yours so the property decision fits the structure you choose.
Frequently Asked Questions
Is buying off-plan cheaper than buying a ready property in Saudi Arabia?
The price is often lower, but the buyer loses the return on instalments and rent while waiting. On schedule, the discount may leave only a small advantage; with delay, the completed unit can be cheaper overall. Compare both on total cost at the same date, including a delay scenario.
What is a typical off-plan payment plan in Saudi Arabia?
Plans vary by developer and project, commonly combining a booking payment, instalments linked to construction milestones and a final payment at handover. For Wafi-licensed projects, payments go into escrow. Read the schedule and the escrow terms carefully, and compare plans on the total cost of waiting.
What happens to my off-plan payments if the project is delayed?
Your payments remain in the project's escrow if it is Wafi-licensed and you paid into the named account, but you continue waiting for the unit. Your rights to compensation or termination depend on the contract. Read the delay and long-stop clauses before buying, and ask your adviser what remedies they provide.
Is a post-handover payment plan better for a foreign off-plan buyer?
Paying more of the price later reduces the money tied up before you receive the unit, and lets rent contribute to later instalments. The developer may price that flexibility into the unit, so compare the total price and schedule with alternatives. Check how instalments after handover interact with title registration and with your eligibility as an owner.
Have a Property Question?
Domira can help you navigate property, financing and investment decisions in Saudi Arabia. Speak with our team for an initial consultation.
