Saudi Rental Yield for a Foreign Investor: A Worked Example Including Currency

A step-by-step calculation of what a non-resident investor actually earns on a Saudi rental apartment, from advertised yield to net return in the investor's own currency.

An advertised Saudi rental yield is usually rent divided by price, which ignores the costs a foreign investor carries and the currency the investor measures wealth in. A non-resident pays more to buy, more to manage and something to bring money home, so the net figure can be less than half the headline. The worked example below shows the method with illustrative numbers you should replace with quotes for your property.

The situation

A euro-based investor living abroad is considering a furnished two-bedroom apartment in a permitted zone, to be let on annual Ejar leases through a management company. The broker quotes a yield based on price and rent. The investor wants the net figure, first in riyals and then in euros.

Assumptions (illustrative)

• Purchase price: SAR 900,000, with the buyer bearing Real Estate Transaction Tax at the published headline rate of 5%.
• Brokerage with VAT SAR 20,000; legal, valuation and document costs SAR 12,000; furnishing SAR 35,000.
• Annual rent SAR 60,000, with one month of vacancy assumed each year.
• Annual costs: service charges SAR 8,000, maintenance SAR 4,000, insurance SAR 1,500, remote administration SAR 6,000.
• Management fee: 8% of collected rent.
• Exchange rate: SAR 4.00 per euro at purchase, SAR 4.20 per euro when income is converted.

Step 1: Advertised gross yield

SAR 60,000 divided by SAR 900,000 equals 6.67%.

This is the broker's figure. It assumes no acquisition costs, no vacancy and no running costs.

Step 2: Capital actually invested

Tax: SAR 900,000 multiplied by 5% equals SAR 45,000. Total: SAR 900,000 plus SAR 45,000 plus SAR 20,000 plus SAR 12,000 plus SAR 35,000 equals SAR 1,012,000.

Return is measured against every riyal committed, not only against the price.

Step 3: Rent actually collected

Monthly rent: SAR 60,000 divided by 12 equals SAR 5,000. Eleven months collected: SAR 5,000 multiplied by 11 equals SAR 55,000.

One month empty removes more than eight percent of the annual rent before any cost is paid.

Step 4: Annual operating costs

Management: SAR 55,000 multiplied by 8% equals SAR 4,400. Total: SAR 8,000 plus SAR 4,000 plus SAR 1,500 plus SAR 6,000 plus SAR 4,400 equals SAR 23,900. Net income: SAR 55,000 minus SAR 23,900 equals SAR 31,100.

Remote administration is a real line for a non-resident, and here it costs more than the insurance and maintenance together.

Step 5: Net yield in riyals

SAR 31,100 divided by SAR 1,012,000 equals 3.07%.

The net return is less than half the advertised yield, before any tax on income that may apply to the investor.

Step 6: Net yield in euros

Capital in euros: SAR 1,012,000 divided by 4.00 equals EUR 253,000. Income in euros: SAR 31,100 divided by 4.20 equals about EUR 7,405. Yield: EUR 7,405 divided by EUR 253,000 equals about 2.93%.

Because the riyal follows the dollar, a stronger euro reduces the return measured at home, and a weaker euro would increase it.

What changes the answer

• A rent assumption above what comparable Ejar leases support inflates every figure after step one.
• Rent restraint measures, such as those introduced in Riyadh in 2025, limit how quickly income can rise to offset cost increases.
• Letting unfurnished reduces the furnishing cost and replacement spending but may lower the achievable rent.
• An investor whose home currency is the US dollar faces very little of the currency effect shown in the last step.
• Any income tax owed by the investor, in Saudi Arabia or at home, reduces the final figure and must be confirmed with an adviser.

What the numbers tell you

• Ask for net yield on total invested capital, never gross yield on price.
• Include a named line for the cost of owning remotely.
• Measure the return in the currency you will spend it in.
• Test the plan at a lower rent and a longer vacancy before deciding.

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.