Why luxury Saudi homes are being sold in Harrods

Over the summer a London lawyer was visiting Harrods with a few clients from the Middle East. The lawyer couldn’t help but notice that a large chunk of the department store was occupied by a pop-up exhibition advertising luxury properties.
What was unusual was that the properties were not in London but in Saudi Arabia. What was even more unusual was that the marketing was aimed at wealthy Saudi businessmen and families, all of whom were living in London.
“It’s a paradox because Harrods is owned by Qatar,” the lawyer says, referring to the bitter longstanding rivalry between the two Gulf countries.
The 350 properties showcased at Harrods were branded residences, which is where a developer goes into partnership with a luxury brand — in this case Ritz-Carlton, Corinthia and Baccarat hotels. These are part of a larger redevelopment, costing an eye-watering $63 billion (£50 billion) to transform Diriyah, a tiny town on the outskirts of the Saudi capital Riyadh, into a large city and tourist destination.
“It is the first time it has been done,” says Erick Knaider, the managing partner at the Saudi Arabia branch of Sotheby’s International Realty, who is selling the properties. “It’s usually the other way around: selling London homes to Saudis in Saudi Arabia.”
Knaider says the “bold move” worked, though, and he and his team ended up making “quite a few sales” on the back of it — more, in fact, in London than in Saudi Arabia.
“But the main goal behind it was not just sales,” he says. “It was exposure, bringing the product here and shining a bit of light on it. It put Saudi Arabia on the map, and we started to have people ask questions.”
A Unesco world heritage site since 2010, Diriyah is the birthplace of the House of Saud, the Saudi royal family, and the capital of the eponymous emirate under the first Saudi dynasty in the 18th and 19th century.
Last year the footballer Lionel Messi went on a guided tour of the old city with his family during a grand tour of the country sponsored by Saudi Arabia’s tourism authority, which earned the footballer some £20 million — but led to his suspension at the Qatari-owned club Paris Saint-Germain. The masterplan for the city includes a number of hotels, offices, four metro stations, as well as shopping and leisure centres.
The new Diriyah is part of Saudi Vision 2030, the trillion-pound project that is the brainchild of Crown Prince Mohammed bin Salman (known simply as “MBS”), aiming to reduce the kingdom’s dependence on oil.
Other than huge luxury resorts on the Red Sea, some of which opened this year, including a Six Senses hotel, perhaps the crown prince’s most spectacular vanity project is the city of Neom, a futuristic metropolis in the northwest of the country.
Within it is the Line, a 110-mile-long, 200m-wide glass-walled city with no cars or streets and no carbon emissions. The kingdom heralds it “a revolution in urban living”, while critics dismiss the project as a folly and a vast vanity project. Earlier this year a report by Bloomberg alleged that the expectations for 2030 have been scaled down rather spectacularly to one and a half miles completed and that no more than 300,000 people will live in the Line by 2030, significantly fewer than the 1.5 million residents the government had hoped for. Saudi Arabia denies the claim and says the project is continuing as planned.
In comparison with Neom and the Line, the £50 billion spent on Diriyah sounds almost modest. The villas, however, are not cheap. The 106 Ritz-Carlton branded residences are the smaller ones, with prices starting from $2.7 million (£2.1 million) up to $7 million (£5.4 million). Knaider says these are almost sold out — clearly the brand’s reputation in the kingdom retains its prestige despite the fact that the nearby Ritz-Carlton hotel in Riyadh was used as a prison during MBS’s “anticorruption” purges in 2017.
Corinthia and Baccarat are more exclusive products, starting from $11 million and rising to $18 million for the larger properties, which span some 850 sq m and look more like little private estates than detached villas.
Knaider says that the Baccarat residences are going to be the largest in the world. The French brand, which most people associate with decorative glasses, jewellery and chandeliers, already has branded residences in Dubai and Miami — the latter in an undulating glass tower reminiscent of the brand’s crystal.
So who on earth is buying an $18 million villa in the middle of the desert?
“Saudi royals for sure, they are a big target of ours,” Knaider says. This comes as no surprise considering the Saudi royal family has an estimated 15,000 members, with 2,000 of them in the inner circle of power. “We’ve transacted with a few HRHs,” Knaider adds. “They own branded residences very similar to these abroad, but not in Riyadh, not in their home town. That’s very appealing to them. Then you’re looking at top-level executives, the likes of the guys that own or are CEOs and chairmen of the biggest Saudi companies in the world.”
• What it’s really like to live as an expat in Saudi Arabia
Knaider says that some 95 per cent of buyers at the Diriyah project are Saudi nationals. The tiny contingent of foreign buyers come mostly from neighbouring Arab countries, notably Egypt, plus one or two buyers from Asia. “We’ve had quite a few inquiries from Russia but no transactions just yet.”
Nothing, notably, from the UK or Europe either. Westerners in Saudi Arabia tend to live in the so-called compounds and almost all of them rent. Knaider argues that “the landscape is still not 100 per cent ready” for foreign buyers.
In this way Saudi is nothing like Dubai. Nonetheless there are signs that the country is trying to emulate the Emirates city’s success. In 2021 it introduced a law that allows foreigners who are permanent residents to buy a home, except in the holy sites of Mecca and Medina.
Earlier this year the government also launched a “residency by investment” (golden visa) programme, which allows foreign nationals to become temporary or permanent residents after purchasing a property in the country. To qualify for the golden visa you would need to buy a home worth at least SAR 4 million (£830,000) — in cash. You would not be able to obtain a mortgage or other financing. And it needs to be an existing property — it cannot be off plan. The visa is valid as long as the person owns the property and would cease validity once it has been sold. Lastly, in order for a foreigner to be able to buy a property, a licence from the Saudi Ministry of Interior is required.
If it sounds complicated it’s because it is. There have been rumours for a long time that the Saudi government is going to loosen the restrictions — but the changes haven’t materialised yet.
On the upside, prices in Saudi Arabia, either in the financial hub of Riyadh or in the coastal town of Jeddah, which attracts most western expats, are significantly cheaper than in the neighbouring United Arab Emirates. Although they are on the up. According to CBRE, the property consultancy, the price of villas in Riyadh and Jeddah went up by about 5 per cent in 2023, to about £1,200 a sq m.
That’s still nowhere near the growth of Dubai, which, according to CBRE house prices in 2023, experienced a 20 per cent increase on the previous year, with the prices of villas skyrocketing 22 per cent over the same period. Prices per square metre for a villa in Dubai are between three and ten times higher than in Saudi Arabia, with prices in Dubai ranging from a minimum of £3,600 a sq m up to almost £12,000 a sq m, depending on location and amenities.
Purely from an investment perspective Saudi Arabia would be a more viable option than Dubai, with higher returns and no prospect of a property crash in sight — although its human rights record could be a deterrent for some.
“When I was there in March, taking taxis around Riyadh, all you could see was building sites,” says the London City lawyer who visited Harrods over the summer. Granted, he adds, those are not uncommon in the Gulf. “But these sites were kilometres-long fenced-off areas of huge parcels of land which have been earmarked for development. I think there’s about 70 hotels in Riyadh and they think in the next five years there needs to be 250. So you can already see the huge potential.”
Sir Rocco Forte reportedly went on a trip to Saudi Arabia this year to scout for hotel locations, after the kingdom’s Public Investment Fund took a 49 per cent stake in his hotel company. Possible locations for Rocco Forte Hotels include Riyadh, Red Sea resorts and even Neom.
“It’s moving very quickly,” the lawyer says. “It may even be that the Line or some of these crazy projects ultimately manifest themselves. What might appear fanciful to the outside world, they’re actually quite focused on delivering.”