Investment Properties for Sale in Medina

Real estate investment in Al Madinah is driven by an almost continuous demand, coming from visitors and pilgrims throughout the year. In 2025, the city's hotels recorded an annual average occupancy rate of 75%, the highest in three years, topping all Saudi cities. However, this demand is not evenly distributed across months or property types, and the difference between a property that yields good income and one that disappoints its owner often lies in these details. This page presents what official figures say about the market, the income and risks of each type of investment property, and how to calculate your net return before purchasing, as part of our comprehensive guide on [Properties for Sale in Al Madinah].

What is the scale of demand driving real estate investment in Al Madinah?

The investment market in Al Madinah is based on visitor flow more than any other Saudi city except Makkah, and official data reveals the size and nature of this demand:

• Visitor Numbers: Al Madinah welcomed 6.45 million visitors in the first quarter of 2025, of whom 4.41 million were from outside the Kingdom, according to the General Authority for Statistics.

• Hotel Occupancy: The annual average hotel occupancy rose to 75% in 2025, compared to 70.7% in 2024.

• Supply Volume: There were 538 licensed hospitality facilities in the city, comprising 64,569 hotel rooms by the end of the first half of 2025, according to the Ministry of Tourism report.

These figures confirm that the demand is real and ongoing, but they also indicate that investors enter a market with strong competition and an expanding supply.

What are the types of investment properties in Al Madinah and how does each generate income?

The source of income, demand pattern, and risks vary by property type, so the correct choice begins with defining the type of income you want before choosing the property. The following table summarizes the main types:

Hotel and Serviced Apartments

Hotel apartments target visitors directly and are mostly managed by an operator who handles renting and services for a percentage of revenues. A key point often overlooked by many investors is that serviced apartments usually have lower occupancy rates than hotels: in the first quarter of 2025, hotels in the city had 82.7% occupancy, while serviced apartments and other hospitality facilities recorded 59.6%. Therefore, the return on this type should be calculated based on serviced apartment occupancy, not the commonly cited hotel figures.

Residential Apartments and Buildings

Residential apartments and buildings serve the constant demand from the city’s residents and expats, offering more stable income less tied to seasons. Owning an entire building gives the investor diversified income sources that lessen the impact of vacancy in one unit, at the cost of greater management and maintenance effort.

Commercial Shops

The value of a commercial shop depends on street traffic and the nature of permitted activities at its location. Lease contracts are generally longer term than residential ones. A leased shop is evaluated by the strength of its tenant and remaining contract length as much as by its location.

Lands

Lands represent an investment in value appreciation, not income, since they do not generate returns until sold or developed. They suit investors with a long-term horizon who do not require periodic income from their capital.

How do seasons affect hotel investment returns in Al Madinah?

Hotel demand in the city clearly varies between months, making the annual average alone misleading when calculating income. In 2025, hotels recorded peak occupancy rates of 85% in January and February each, then 78% in March, 76% in October, jumping to 84% in November and December. The same effect shows in visitor numbers: from 6.45 million visitors in the first quarter of 2025 to 3.77 million in the second quarter. This means a large portion of hotel property income concentrates in specific months, with nightly rates fluctuating accordingly, so financial planning is based on income during and outside the season combined.

What risks must be considered before buying an investment property in Al Madinah?

Any investment opportunity assessment is incomplete without accounting for factors that may reduce its return, with key considerations in Al Madinah including:

• Growth of hotel supply: 6,628 new rooms were added to the city in the first half of 2025 alone, and with major projects entering the market, competition for guests is increasing.

• Operator fees and costs: The operator’s percentage and fees for maintenance and common services are deducted from revenue before net income reaches you.

• Vacancy periods: In residential leasing, every vacant month reduces annual return by about 8%.

• Licenses: Operating units for tourist accommodation is subject to Ministry of Tourism licenses, so verify the property’s status before relying on this income.

• Ownership eligibility: For non-Saudis, eligible properties are limited to approved zones, and no expected returns hold value from properties you are not legally allowed to fully own.

Read also: Villas for Sale in Saudi Arabia

How to calculate the net return on an investment property in Al Madinah?

The advertised return is usually the gross yield, while what actually reaches the investor is the net return after costs, calculated by dividing the net annual income by the total purchase cost, including fees, commissions, and any finishing.

Hypothetical example for illustration only: An apartment with a total cost of 1,000,000 SAR generates gross income of 80,000 SAR annually; after deducting 20,000 SAR for operation, maintenance, and fees, the net income is 60,000 SAR, making the net return 6% instead of the advertised gross return of 8%.

Added to this calculation is the impact of property value increase or decrease upon sale, an uncertain factor that should not alone guide the decision. For deeper methodology on returns, see the article Real Estate Investment Return in Saudi Arabia.

Can a foreign investor buy an investment property in Al Madinah?

A non-Saudi Muslim can purchase an investment property in Al Madinah provided it is within the approved ownership zones for non-Saudis. From an investment perspective, these zones include the two main types in the city: hospitality projects near the Prophet’s Mosque targeting visitors, and integrated projects on the city outskirts combining residential units and serviced apartments. Non-Muslims access the city market through licensed real estate investment funds. Details of what each category is permitted to buy are on the page Properties for Sale in Al Madinah for Foreigners.

How does امتلاك Global help you choose an investment property in Al Madinah?

A good investment decision in Al Madinah is based on realistic net income, not on general occupancy rates or promises of value appreciation. That’s why we start with each investor by defining their goal, whether regular income or capital growth, check their eligibility for ownership, then compare available opportunities based on net returns after operating costs and seasonality. We review management contracts if the property is hotel-type, and if you wish to view shortlisted opportunities before deciding, you can book a free property tour on-site or online with one of our consultants in Al Madinah.