MULKIYA · GUIDES
Riyadh vs Jeddah: Which City Pays the Better Rental Yield
Reviewed against the official register · Updated 2026-08-02
Riyadh's gross residential yield runs 8.89% against Jeddah's 7.89%, per licensed data for Q1 2026. What the gap is worth, and what Riyadh's rent freeze changes.
The headline gap
Licensed yield data for Q1 2026 puts gross residential yield at 8.89% in Riyadh and 7.89% in Jeddah, a full percentage point between them. Both city figures sit inside the 7-9% band the data prints for the two cities. Gross means the year's rent measured against the purchase price, before any cost. Read the gap as a starting position, not a verdict: the district, the building and the tenant mix move a specific asset above or below its city's figure.
What one point is worth in riyals
On SAR 1,000,000 of property, one percentage point of gross yield is SAR 10,000 of rent a year, or SAR 50,000 across five years before costs, if the rent holds. The costs themselves are the same in both cities. At purchase the 5% real-estate transaction tax applies, legally the seller's liability and commonly priced into the deal. At exit a foreign seller pays a 2% disposal fee in Riyadh and in Jeddah alike. The tax side does not pick a winner. Rent and price do.
Riyadh's freeze versus Jeddah's open rents
The Riyadh figure comes with a condition Jeddah does not have. By royal order of 25-09-2025, residential and commercial rents inside Riyadh's urban boundary are frozen for five years: the rent you sign is the rent you hold, leases renew automatically, and every lease sits on the official leasing register. Jeddah sits outside the freeze, so Jeddah rents can still move, up or down. In Riyadh you underwrite a fixed income line with no growth until the freeze lifts. In Jeddah you underwrite an open one, where growth is possible and decline is possible. Pick the shape of income you want to hold.
What the riyal buys in each city
Report-grade licensed market research for Q2 2025 puts a Riyadh apartment at SAR 6,175 per square metre, up 6.3% year on year, against a Jeddah apartment at SAR 4,324. Villas read the same way: SAR 5,470 per square metre in Riyadh against SAR 5,040 in Jeddah. Riyadh's higher yield pairs with a higher entry price, which is how markets price income. The wider market is cooling: the official residential price index recorded -3.6% year on year in Q1 2026, so treat the Q2 2025 rows as levels to verify, not live quotes.
Which city, for which buyer
Choose Riyadh if you want the higher printed yield on its terms: income fixed at today's rent, and an entry price that does the work because the rent cannot grow until the freeze lifts. Choose Jeddah if you accept the lower printed yield for an open rent line, knowing open means both directions. In both cities a foreign owner buys inside the 100+ designated zones, pays the same purchase tax and the same exit fee, and confirms the parcel on the official register the same way. The honest comparison runs asset by asset: the same money, the same costs, a different shape of income.
The honest next step
Yield data only matters once you may buy. Foreign ownership runs through Royal Decree M/14, signed 14-07-2025 and in force 22-01-2026, and Council of Ministers Decision 43 of 23-06-2026 endorsed the zones. Mulkiya is not the seller and not the broker, and it takes no commission. The honest first step is the eligibility check: seven questions about your status and your target property, answered by a deterministic rules engine against the law. Know your class first, then compare Riyadh against Jeddah asset by asset, with the parcel confirmed on the official register.
Is Riyadh's rental yield higher than Jeddah's?
On the licensed yield data for Q1 2026, yes: 8.89% gross residential yield in Riyadh against 7.89% in Jeddah, a gap of one percentage point. These are gross figures, so verify the specific asset against its city figure before you rely on the gap.
Does Riyadh's rent freeze make Jeddah the better buy?
Not by itself. The five-year freeze fixes Riyadh rents at today's level inside the urban boundary, so income there stays fixed until it lifts. Jeddah rents sit outside the freeze and can still move, up or down. The choice is between a fixed income line and an open one.
Are buying costs different between Riyadh and Jeddah?
No. Both cities carry the 5% real-estate transaction tax at purchase, legally the seller's liability and commonly priced into the deal, and the 2% disposal fee for a foreign seller at exit. Costs do not pick the city. Rent and price do.
Can a foreigner buy rental property in both cities?
Yes. Riyadh and Jeddah both sit inside the 100+ designated zones where foreign buyers may own, under Royal Decree M/14 and Council of Ministers Decision 43. Your buyer class decides what is open to you, so run the eligibility check before you compare assets.
Do higher yields mean prices are rising?
No. The official residential price index recorded -3.6% year on year in Q1 2026: the market is cooling. Yield is rent measured against price, not a promise of price growth, and a cooling market means the exit price is not guaranteed in either city.