Renovating Before Selling: A Worked Example of What Returns

Some improvements return more than they cost and some do not. A calculation comparing three options on the same property.

Owners preparing to sell often assume that money spent on renovation returns with a margin. Sometimes it does. The example below compares three levels of intervention on the same apartment to show where the return stops.

The situation

An owner plans to sell an older apartment currently worth an estimated SAR 620,000 in its present condition. Three options are under consideration before listing.

Assumptions (illustrative)

• Current estimated value as is: SAR 620,000.
• Option A: cosmetic refresh, assumed cost SAR 25,000.
• Option B: kitchen and bathrooms renewed, assumed cost SAR 95,000.
• Option C: full renovation including layout changes, assumed cost SAR 210,000.
• Assumed value after Option A: SAR 660,000.
• Assumed value after Option B: SAR 730,000.
• Assumed value after Option C: SAR 790,000.
• Assumed additional holding cost during works: SAR 2,500 per month.

Step 1: Option A return

SAR 660,000 less SAR 620,000 equals SAR 40,000 uplift, against SAR 25,000 cost, plus roughly one month of holding at SAR 2,500.

A net gain of about SAR 12,500, and the property also sells faster because it presents better. Cosmetic work is usually the highest return per riyal spent.

Step 2: Option B return

SAR 730,000 less SAR 620,000 equals SAR 110,000 uplift, against SAR 95,000 cost, plus roughly three months of holding at SAR 7,500.

A net gain of about SAR 7,500. The work is worth doing if the kitchen and bathrooms are genuinely dated enough to deter buyers, and marginal otherwise.

Step 3: Option C return

SAR 790,000 less SAR 620,000 equals SAR 170,000 uplift, against SAR 210,000 cost, plus roughly six months of holding at SAR 15,000.

A net loss of about SAR 55,000. Full renovation before sale usually exceeds what the market pays for it, because buyers discount work they did not choose.

Step 4: Comparing on return per riyal

Option A returns about SAR 1.60 per riyal spent, Option B about SAR 1.16, Option C about SAR 0.81.

The return declines as the intervention grows, which is the general pattern: presentation pays, renewal is marginal, reinvention rarely does.

Step 5: The ceiling effect

If comparable renovated units in the building sell around SAR 740,000, Option C cannot recover its cost regardless of quality.

Every building and district has a price ceiling. Spending beyond it produces the best apartment in the building and no additional value.

What changes the answer

• If the property is already in reasonable condition, even cosmetic work returns less.
• If the district has no ceiling nearby, larger interventions may return more than this example suggests.
• A longer sale period increases holding costs and erodes whichever option is chosen.
• Doing the work yourself changes the cost side but consumes time that has its own value.

What the numbers tell you

• Establish the price ceiling for comparable units before deciding how much to spend.
• Prioritise presentation and obvious defects over reinvention.
• Include holding costs, since works extend the time before the property sells.
• Remember that buyers discount work they did not choose, which limits what personal taste returns.

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.

If you are buying, selling or investing, Domira can verify the documents, assess the property and build the numbers with you before you commit to a transaction.