Renovate an Old House or Build New? Your Complete Guide to Smart Real Estate Investment
Should you buy an old house and renovate it, or build from scratch? A comprehensive guide comparing costs, risks, and benefits, with engineering inspection criteria and smart renovation priorities.
Introduction: The Tough Equation Every Saudi Family Faces
Picture this scenario: You found an old villa at an attractive price in a well-serviced, upscale neighborhood. The location is excellent, the space is generous, and the price is much lower than new villas in the same area. But the house needs "some renovation," as the seller puts it. The question puzzling you: Should I buy and renovate? Or save my money and build a new house in a farther neighborhood?
This decision faces thousands of Saudi families annually, and it's not a simple one! The wrong choice could cost you hundreds of thousands of riyals and years of dealing with endless problems. Meanwhile, the right choice could save you money and time while giving you your dream home.
In this comprehensive guide, we'll provide everything you need to make the right decision: When is renovation a smart choice? When is new construction better? How do you inspect an old house before buying? And what are the correct renovation priorities?
First: The Economic Equation - Understanding the Full Picture
Rising Land Prices in Serviced Areas
In fully-serviced neighborhoods (central and north of major cities), land prices have reached record levels. For example, in Riyadh's northern neighborhoods like Al-Malqa and Al-Narjis, the price per meter ranges from 2,500 to 5,000 riyals! While in outskirts and remote areas, the price per meter might start from only 300-500 riyals!
This means a 400 sqm plot in a serviced neighborhood could cost 1.5 to 2 million riyals, while the same area in the outskirts might not exceed 200,000 riyals!
The Advantage of Old Properties in Prime Locations
An old property (20+ years) in a serviced neighborhood often features: more spacious rooms compared to modern "compressed" designs, a location with complete services (schools, hospitals, markets, paved roads), and a lower price per square meter compared to new properties in the same neighborhood.
However! This option carries "hidden cost" risks that could completely overturn your calculations.
Second: When is Renovation the Smart Choice?
1. The Structural Framework is Sound
If the foundations, columns, and ceilings are in good condition, you have a strong "skeleton" to build upon. Houses built with high quality in the 80s and 90s might be structurally better than some modern buildings!
2. The Location is Strategic and Irreplaceable
If the house is in a premium neighborhood, close to your work, with excellent schools and available services, this is a priceless advantage. Moving to a farther neighborhood means: longer daily distances, more fuel consumption, wasted time on roads, and possibly lower-quality schools.
3. Renovation Cost is Less Than 50% of New Construction
The golden rule: If comprehensive renovation cost (including expected surprises) doesn't exceed half the cost of building a similar house from scratch, renovation is an economical choice.
Third: When is New Construction Better?
1. Reinforcement Steel Corrosion
If engineering inspection shows rust and corrosion in reinforcement steel inside columns or foundations, this is a real danger. Reinforcing a corroded structural frame might cost more than demolition and rebuilding!
2. Foundation Problems
Floor settling, large cracks in walls extending from foundation to ceiling, or obvious building tilt are all signs of foundation problems that may be economically irreparable.
3. Renovation Cost Exceeds 60% of New Construction
If comprehensive renovation estimates reach more than 60% of new house construction cost, you're paying almost the price of a new house but getting a "patched" old house!
Fourth: Due Diligence Inspection - Your First Step Before Buying
Success in the renovation or construction decision depends entirely on accurate engineering inspection before purchase. Don't rely on a "quick look" or the seller's words!
What Should Be Inspected?
1. Structural Safety (Most Important!)
Inspect foundations and columns: Are there cracks? Is reinforcement steel visible? Are there rust or corrosion signs?
2. Electrical Network
Old wires (more than 20 years) usually can't handle modern AC and appliance loads. Inspecting the electrical panel, breakers, and wire quality is essential.
3. Plumbing Network
Old galvanized iron pipes corrode from inside, causing rusty water and weak pressure. Checking water pressure, looking for leaks, and inspecting pipe condition is essential.
Fifth: Renovation Priorities - Infrastructure First!
If you decide to renovate, beware of the common mistake: spending the budget on "cosmetics" (paint, flooring, decorations) and neglecting the "internals"!
Correct Order of Renovation Priorities:
Phase 1: Structural Framework (if needed)
Treating any structural cracks, reinforcing columns if necessary, fixing foundation problems.
Phase 2: Electrical and Plumbing Network (Most Important!)
Golden advice: Replace the plumbing and electrical network completely! Old pipes (galvanized iron) are usually corroded and full of rust. Old wires may not handle modern AC loads and could cause fires.
Phase 3: Insulation
Roof insulation (waterproof and thermal), tank insulation, and treating any leaks.
Phase 4: Space Redistribution
Breaking walls to open halls, merging rooms, or adding bathrooms. This phase gives the old house a "new spirit" that suits modern taste.
Phase 5: Aesthetic Finishes
Only now comes the stage of flooring, paint, doors and windows, and decorations.
Sixth: Real Cost Comparison
New Construction Cost (2024-2025)
Shell construction price: 500 - 700 SAR/m²
Medium finishing price: 1,000 - 1,500 SAR/m²
Luxury finishing price: 2,000 - 3,000 SAR/m²
Total cost for 300m² villa with medium finish: 450,000 - 650,000 SAR (without land)
Comprehensive Renovation Cost
Simple renovation price: 50 - 100 SAR/m²
Medium renovation price (+ electrical + plumbing): 150 - 300 SAR/m²
Comprehensive renovation price: 300 - 500 SAR/m²
Total cost for comprehensive renovation of 300m² villa: 90,000 - 150,000 SAR
Frequently Asked Questions
How much does renovating an old house in Saudi Arabia cost?
Renovation costs range from 50 SAR/m² for simple renovation (paint and flooring) up to 500 SAR/m² for comprehensive renovation (complete replacement of electrical and plumbing with layout modifications). A 300m² villa might cost from 15,000 to 150,000 SAR depending on renovation type.
When does renovation become economically unviable?
When renovation cost exceeds 60% of new construction cost, when there are structural problems in foundations and columns, or when reinforcement steel corrosion is advanced. In these cases, demolition and construction is cheaper long-term.
Is engineering inspection before purchase necessary?
Yes, and it's a necessary investment, not an additional cost. Inspection cost (1,500 - 5,000 SAR) could save you hundreds of thousands if you discover major problems before buying. The inspection also gives you negotiating power to lower the purchase price.
How long does renovating an old house take?
Simple renovation: 2-4 weeks. Medium renovation: 2-3 months. Comprehensive renovation: 4-6 months. Compare that to new construction which takes 12-18 months.
What is the lifespan of buildings in Saudi Arabia?
Old buildings (before building code): 30-50 years on average. Modern buildings meeting code: up to 70 years. Buildings executed with high quality with regular maintenance: may exceed 100 years.
Conclusion: How to Make the Right Decision
Follow these steps:
1. Define your complete budget (purchase + renovation or land + construction)
2. Define your priorities (Is location more important or a new house?)
3. If you find an attractive old property, request engineering inspection before any commitment
4. Compare total cost (purchase price + comprehensive renovation) with (land price + new construction)
5. Calculate the "hidden cost" of a distant location (fuel, time, schools)
6. Make your decision based on numbers, not emotions
Remember: There's no absolute "correct" decision. The right decision is the one that fits your circumstances, budget, and family priorities.
At Raghdan, we help you find the right property whether new or old with renovation potential. Browse our properties and benefit from our experience in property evaluation.