Riyadh Real Estate

WAFI agreement Saudi Arabia – How does it protect Off-Plan Investors – How does WAFI compare to RERA in Dubai?

Saudi Arabia continues to push the boundaries across multiple sectors, and none more so than the Real Estate Sector. Off Plan Dubai, now in just over 18 months, has transacted over 500m SAR of real estate with HNWI investors, Family/Private offices, and this rapid growth shows no signs of slowing down.

We have now been operational and profitable for over 10 years, initially focusing solely on Dubai, and we have since added London and Manchester to our investment portfolio offerings. The UK has some of the tightest regulations seen anywhere in the world. Following the 2008 market crash, RERA revamped many aspects of the Real Estate process in Dubai, and as such, investors are much more protected than they were previously.

Saudi Arabia, driven by multi-layered growth, emerged as a market we aimed to target comprehensively. Our investors sought diverse options, and we sought to accelerate our growth and establish ourselves as a leading international player in the Real Estate sector. 

Our primary concern was investor protection and the regulations that safeguard investor capital. We conducted a thorough review of the process, and the primary protection framework is outlined in the WAFI agreement. Here is a concise summary of how it works and how it compares to the REAR regulations in Dubai.  

The Wafi program is Saudi Arabia’s regulatory framework governing the sale and marketing of off-plan real estate projects. Administered by the Ministry of Municipal and Rural Affairs and Housing, it ensures that developers cannot simply launch and sell projects without meeting strict licensing and financial conditions. To secure approval, a developer must present detailed project plans, economic feasibility studies, and secure guarantees, with all customer payments deposited into a dedicated, regulated Escrow Account. These funds can only be released in line with verified construction progress, preventing misuse of investor money and reducing the risk of incomplete developments.

For investors, this means that when they sign a Wafi Agreement, they are legally protected: developers are monitored, construction progress is independently reviewed, and buyers’ funds are safeguarded. This framework aligns Saudi Arabia with global standards, similar to escrow systems used in Dubai, and reflects the government’s aim to build trust and transparency in the off-plan market. By requiring financial discipline and strict oversight, WAFI helps ensure that investors are not just buying into promises, but into regulated, deliverable projects. As an advisory, we always aim to work with projects where payments on the payment plan are construction-linked. Only once the independent surveyor has verified a construction milestone can a payment request be initiated. 

Here’s a clear side-by-side comparison of Saudi Arabia’s WAFI system and Dubai’s RERA escrow law, tailored for investors considering off-plan property:

WAFI (Saudi Arabia) vs RERA Escrow (Dubai)

1. Regulatory Body

  • WAFI (Saudi): Managed by the Ministry of Municipal and Rural Affairs & Housing.

  • RERA Escrow (Dubai): Overseen by the Real Estate Regulatory Authority (RERA) under the Dubai Land Department.

2. Developer Requirements

  • WAFI: Developers must obtain a WAFI license, provide feasibility studies, and meet strict financial guarantees before selling.

  • RERA: Developers must register projects with RERA, open a project-specific escrow account, and submit financial guarantees.

3. Buyer Payment Protection

  • WAFI: All buyer payments go into a regulated escrow account; funds are released only after verified construction progress.

  • RERA: Payments are also held in escrow and released to developers according to construction milestones confirmed by independent auditors.

4. Oversight & Monitoring

  • WAFI: Regular audits, inspections, and progress checks by licensed engineers appointed by the ministry.

  • RERA: Continuous monitoring with mandatory developer reporting and independent audit verification.

5. Penalties for Non-Compliance

  • WAFI: Developers face fines, license suspension, and potential blacklisting from future projects.

  • RERA: Heavy fines, cancellation of projects, and restrictions on developer activities.

6. Investor Confidence

  • WAFI: A relatively newer system (introduced mid-2010s) but increasingly robust, designed to protect buyers and attract foreign investment.

  • RERA: Established in 2007 and globally recognised, it provides a strong track record that has built international trust in Dubai’s off-plan market and has vastly improved since the 2008 Market Crash.

Key takeaway for investors: Both systems aim to safeguard buyer funds and ensure delivery, but Dubai’s RERA is more mature and time-tested. At the same time, Saudi Arabia’s WAFI is newer but backed by substantial government reforms under Vision 2030. This positions Saudi off-plan as an emerging, regulated market with increasing protections, similar to Dubai a decade ago.

Discover our range of Saudi Arabia Property Investments here. This list will continue to grow and expand over the coming years.

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