There are often waiting lists of up to 12 months at compounds. Strong demand means compound owners can command high prices for accommodation.
Nationwide, demand for expatriate accommodation is strong and both Riyadh and Jeddah are struggling to satisfy demand from international companies and individuals. Rents have risen and many expatriates choose not to live in compounds but to rent accommodation among the local population.
Outside the main cities, expatriate accommodation is even harder to find. Property firms say developing compounds for medium-term use related to particular projects is not profitable.
In Jeddah, availability of housing is slightly better than in Riyadh, but the kingdom’s buoyant projects market and the government-led drive to encourage foreign investors to the kingdom are both drawing overseas experience into Saudi Arabia.
The slowdown in the economies of neighbouring states is another factor, with professionals such as project managers and engineers relocating to Saudi Arabia from once booming economies such as Dubai and Bahrain.
Long-term tenants are usually able to negotiate favourable rates if they have been in a compound for several years, but their rents are seldom more than 5-10 per cent below the market price. Lease prices often include furniture and utility rates, but a security deposit is usually required.
In a 2010 survey of compound owners, MEED found that the nationality of applicants and the identity of their employers can influence how long it takes to secure villas and apartments. Waiting lists shortened considerably if the applicant profile fitted with the mix of tenants already living on the site.
In general, compound owners tend to prefer tenants consistent with the origins of the accommodation. For example, the Lotus IV compound in the north of Jeddah was set up for the French community and today hosts French citizens as well as some from Canada, Lebanon and the US. In the MEED survey, several compound owners confirmed that applicants from the UK and the US would be able to get accommodation more easily than those from other countries.
Security fears after bombings in 2003-04 led to many expatriate workers moving their families out of the kingdom. The Riyadh bombings in May 2003 marked the most devastating attack on expatriate housing, when 26 people were killed at three central compounds. The attacks continued into 2004 in Jeddah, Yanbu and Riyadh. The Interior Ministry responded with a crackdown on suspected extremists, which is ongoing.
Security has also been tightened in the compounds themselves. Property firms employ the Saudi armed forces to guard their complexes, which can cost upwards of SR1m ($266,645) a year for each compound. To reduce risk and therefore the need for security, some compound owners are reported to have chosen to operate Muslim-only compounds.
With improved security in the country, many expatriate families are now returning to live in the kingdom. Demand for villas is rising, and one- and two-bedroom apartments no longer dominate the real estate market.