Middle East

Saudi princes forced to sell homes yachts, art as they feel financial squeeze

Saudi princes have sold more than $600 million worth of real estate, yachts and artwork in the US and Europe since the kingdom’s de facto ruler, Mohammed Bin Salman (MBS), tightened the purse strings of the ultrawealthy ruling family. That’s according to a report in the Wall Street Journal, which found that the kingdom’s senior princes are trying to raise cash and avoid scrutiny from MBS.

Saudi princes are being squeezed financially by MBS forcing many to cut back on their past lavish lifestyles which saw them purchase huge real estate abroad and employ an army of domestic workers. The crown prince has made several reforms that have curtailed perks for thousands of royals, including paid vacations abroad or electricity and water bills at their Saudi palaces. Such perks are said to have amounted to hundreds of millions of dollars in annual costs for the Saudi government.

The government is squeezing royal family members in other ways, launching this year a tax of $2,500 for each domestic worker beyond the fourth employee, costing some royals hundreds of thousands of dollars a year.

READ: Saudi prince yelled at Biden adviser when asked about Khashoggi murder

Traditional means of amassing huge fortunes are also drying up for the princes. Lucrative contracts where a Saudi prince acted as middleman are now a thing of the past. Other avenues have also been closed. It’s claimed that some royals used to generate wealth by taking loans from local banks without paying them back while others expropriated land from commoners or exploited the foreign labour visa system for profit.

People familiar with royal finances are reported saying that the princes continued to benefit from such schemes up until Bin Salman came to power. However, a system of stipends for thousands of Saudi princes, which the US cables said cost the government billions of dollars a year, remains intact.

Many princes have adjusted their lifestyles due to shifts in the global economy and changes inside Saudi Arabia that have “turned off the taps,” according to one person. “They had a standard of life that was beyond any expectation,” said another person familiar with the transactions. “The expenditure is out of this world. It takes time for them to adapt.”

The squeeze in finance has forced a number of senior princes to liquidate their assets, including a few that were detained temporarily in Riyadh’s Ritz-Carlton hotel in 2017 in what critics called a shakedown and power play by the crown prince.

READ: Saudi Crown Prince: 95% of those arrested agreed to return funds

Among the assets sold recently are a $155 million British country estate, two yachts more than 200 feet long, and Mughal jewels gifted as wedding presents by a late king. The sellers, including former ambassador to Washington Prince Bandar Bin Sultan, were once among the most powerful people in Saudi Arabia. The family of Prince Bander recently unloaded a mansion in London’s Knightsbridge neighbourhood that sold for a record $290 million, according to people close to the royals and familiar with the transaction. Several other sales, including a Paris mansion next to the Eiffel Tower for over $87 million, were mentioned by the WSJ.

Some princes are also trying to mortgage their global assets to raise money to make up for a shortfall from traditional sources of income. One of them, Prince Fahd Bin Sultan, is said to have been sued by Credit Suisse in November for allegedly defaulting on loans he took to refinance a $55 million superyacht and a $48 million estate south of London, court documents show.

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