Residential vs Commercial: The Key Differences
Residential Advantages
- Consistent demand — people always need housing
- Lower risk profile
- VAT exempt
- Easier to find replacement tenants
Commercial Advantages
- Higher yields (8-12%)
- Longer leases (3-5 years typically)
- Tenant usually handles fit-out costs
Numbers Comparison
800,000 SAR apartment at 5,000/month = 7.5% yield. Same value commercial at 7,000/month = 10.5% yield but with VAT obligations and potential vacancy periods.