One of the common questions among new investors in the Saudi Arabian real estate market is: Which type of real estate is the best place to start investing? Here, we will take a look at the importance of real estate valuation and its role in making smart investment decisions such as buying or selling real estate or obtaining a mortgage.

What are the types of real estate in Saudi Arabia?

• Residential: it includes a variety of homes such as palaces that are characterized by their large area and beautiful facilities such as gardens, swimming pools, and playgrounds, villas with floors that inspire width and luxury, and buildings that contain many apartments and residential units, as well as apartments, studios, and others. All of them are designed to be a shelter for their owners and can be used for investment and building investment of real estate assets.
• Commercial: it includes offices, administrative buildings, and shops designed to be a place of work. The type of commercial real estate contributes to the achievement of profits for its owners and the prosperity of commercial activity.
• Industrial: includes factories, workshops, warehouses, and production facilities.
• Agricultural land: which is prepared to be used for agricultural purposes and the promotion of agricultural products such as fields and commercial markets.

What is the importance of real estate valuation to investing?

The investor takes many steps before actually investing and forming his investment portfolio, he starts by searching for the right sector to invest in by buying or selling real estate, and then he starts consulting specialists to know the technical matters that he cannot know on the surface and study the expected return from each type, then determine his investment plan.

In the case of real estate investment, the investor needs a real estate valuation, which can be done by a certified real estate valuation company such as Aain Real Estate Valuation Company, based on many factors such as the type of real estate, its condition, surrounding facilities, and many other factors.

What is the most suitable real estate type to start 

If you don’t know what type of real estate is best to start with when building your real estate investment portfolio, and you have more than one real estate that you are interested in investing in, we recommend that you use an accredited real estate valuation company to help you know the value of the real estate and your return on investment, and we also recommend that you read this guide which provides some information and insight into the real estate sector in Saudi Arabia:

1. Residential real estate is the best type of real estate investment to start with. The process of buying and selling residential real estate is characterized by its speed due to the activity of the real estate sector in the Kingdom, and its price is likely to increase in the future if you choose it in a prosperous area with services and population and is evaluated by the method of comparison, income.

2. If you are the owner of a commercial facility, we advise you to choose to invest in commercial real estate because of its impact on saving expenses for the facility, commercial real estate valuation uses many real estate valuation methods such as the Comparison method, discounted cash flow, capitalization of income, profits, and replacement cost.

About real estate valuation:

It is the process of determining the fair value of real estate impartially based on specific criteria and professional methods carried out by many companies, most notably Aain Real Estate Valuation Company, which is accredited by the Saudi Authority of Saudi Valuers and is a member of the Royal Institute of Chartered Surveyors(RICS) which makes it provide the best real estate valuation service with credibility and accurate values, and it also provides real estate valuation services for major banks such as Al Ahli Bank and Al Rajhi Bank to facilitate mortgage financing. The main valuation methods it uses for investors are:

• Comparison: It is used to value the real estate by comparing the current price of the real estate with others similar in the area.
• Cost: A valuer estimates the cost of rebuilding the real estate using similar materials to determine its current market value.
• Income: The value of a real estate real estate is estimated based on the income it generates as well as its potential income.

In conclusion, real estate valuation plays a pivotal role in the real estate investment process as it determines your budget and return based on many methods such as comparison, cost, and income.