Experts expect the recent 50-basis-point interest rate cut by the Saudi Central Bank (SAMA) to boost the Kingdom’s real estate market.
The move is likely to direct more investor funds into property, enhance liquidity for developers, and speed up the construction of new projects.
Experts foresee a new market dynamic that could drive property prices up and sustain growth for the next six years, with demand for real estate expected to peak in the coming months.
Ahmad Al-Faqih, a real estate expert, told Asharq Al-Awsat that the rate cut will trigger a wave of delayed buying from those who postponed purchases during recent price increases. He anticipated a significant rise in demand over the next six months.
Al-Faqih also noted that recent months have seen demand outpacing supply, partly due to new buyers entering the market after changes allowing non-Saudis to own property. This trend is expected to particularly affect major cities like Riyadh.
The interest rate reduction will create strong demand for residential units, combining with buyers who delayed purchases in previous years, he stressed. This shift could reshape the market and lead to rising property prices.
Additionally, Al-Faqih noted that the changes will encourage developers to build new residential projects and attract non-Saudi investors, increasing supply but not enough to match high demand.
Lower financing costs will further motivate investment in the real estate sector.
Real estate expert Saqr Al-Zahrani told Asharq Al-Awsat that Saudi Arabia’s recent interest rate cut is also expected to boost homeownership.
With borrowing costs lower, more individuals are likely to buy homes, especially in growing areas like Riyadh and Jeddah. However, challenges in finding suitable housing for middle- and low-income groups may limit the benefits.
Al-Zahrani noted that the impact on commercial real estate might be slower to materialize due to broader economic factors. Yet, increased foreign investment and interest in projects like NEOM and Qiddiya could boost opportunities in the sector.
The rate cut will positively affect property developers by improving liquidity, allowing them to take on new projects and speed up construction, while also helping them manage rising material costs, he remarked.
Regarding property prices, Al-Zahrani cautioned that it’s hard to predict the exact effects of the rate cut. While lower borrowing costs may boost demand and drive prices up, other factors like regulations and development costs could limit this increase.
Al-Zahrani expected residential prices to rise faster than commercial prices, though not in direct correlation with the interest rate change.
