Saudi Arabia: Rising Demand for Housing Units Drives Property Prices Higher

Residential and commercial real estate in the Saudi capital, Riyadh (Asharq Al-Awsat)
Residential and commercial real estate in the Saudi capital, Riyadh (Asharq Al-Awsat)
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Saudi Arabia: Rising Demand for Housing Units Drives Property Prices Higher

Residential and commercial real estate in the Saudi capital, Riyadh (Asharq Al-Awsat)
Residential and commercial real estate in the Saudi capital, Riyadh (Asharq Al-Awsat)

Real estate experts have attributed the ongoing rise in Saudi Arabia’s property price index, over 16 consecutive quarters, to significant and growing demand for housing units.

This trend is supported by the success of government-backed housing projects in attracting consumer interest, the evolution of financing mechanisms, and flexible credit facilities and subsidized financing programs offered by banks.

Experts predict that property price increases, particularly in major cities, will persist through the upcoming quarters of 2025 if the launch of new housing projects continues. The real estate price index saw a 3.6% year-on-year increase in the fourth quarter of 2024, marking the fastest growth since the first quarter of 2021.

According to the General Authority for Statistics’ quarterly report on property prices for the fourth quarter of 2024, the index was primarily driven by a 3.1% rise in residential property prices, a 5.0% increase in commercial property prices, and a 2.8% rise in agricultural property prices. On a quarterly basis, the property price index rose by 1.6% in the fourth quarter compared to the third quarter, with residential property prices increasing by 1.0%, commercial prices by 2.7%, and agricultural property prices by a significant 9.8%.

In remarks to Asharq Al-Awsat, Khaled Al-Mobid, CEO of Menassat Realty Co., attributed the price surge to heightened demand for housing units and the success of government-subsidized housing projects, which have attracted significant consumer interest. He noted that these factors have boosted property prices, especially in neighborhoods hosting large housing projects such as those in eastern and western Riyadh.

Previously low-priced properties in these suburban areas have experienced sharp price hikes due to increased demand. Al-Mubid believes that if the momentum of housing projects continues in major cities, coupled with strong consumer purchasing power and ongoing growth in the real estate sector, property prices will likely continue to rise through mid-2025, or at the very least, stabilize without declining.

Abdullah Al-Mousa, a real estate expert and marketer, told Asharq Al-Awsat that the sustained rise in property prices is linked to economic and investment growth driven by Saudi Arabia’s Vision 2030 initiatives.

He pointed out that large-scale investments in infrastructure and city development, particularly in major cities like Riyadh and Jeddah, have boosted demand for real estate.

Mega projects such as Qiddiya and developments in entertainment and hospitality have also increased the value of surrounding areas and attracted interest from buyers and investors.

Al-Mousa highlighted that population growth, combined with government initiatives like the “Sakani” program, rising income levels, and stronger purchasing power, have intensified demand for residential properties. Families are increasingly seeking larger spaces and greater privacy, leading to a shift in demand toward villas and spacious apartments.

The evolution of financing mechanisms, including flexible credit facilities and subsidized loan programs, has improved homeownership accessibility. Al-Mousa noted that lower global interest rates have made borrowing more attractive, accelerating purchasing decisions and increasing activity in the real estate market. The expansion of luxury housing projects and developments targeting middle- and high-income families has further driven competitiveness and property price growth.

Real estate marketer Saqr Al-Zahrani noted that Saudi property prices have shown a marked acceleration in the fourth quarter of 2024. He attributed the rise in the general index to the complex interplay of supply and demand dynamics in the market, supported by Saudi Arabia’s recent economic and structural transformations and the influence of foreign investments.



Riyadh Real Estate Awaits Impact of Measures to Curb Price Surge

Residential and commercial properties in the Saudi capital Riyadh (Reuters)
Residential and commercial properties in the Saudi capital Riyadh (Reuters)
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Riyadh Real Estate Awaits Impact of Measures to Curb Price Surge

Residential and commercial properties in the Saudi capital Riyadh (Reuters)
Residential and commercial properties in the Saudi capital Riyadh (Reuters)

The Saudi real estate market is currently in a state of cautious anticipation, driven by unprecedented decisions and measures announced by Crown Prince Mohammed bin Salman.

These steps aim to increase the supply of properties and restore balance in the market to address the rising costs of land and rental prices.

Data from the market shows a stagnation in property purchases by citizens, as they await the impact of these measures, hoping they will bring stability to property prices in Riyadh and lower costs.

In March, the Crown Prince directed the implementation of a series of regulatory measures, including lifting restrictions on the development of over 81 square kilometers of land north of Riyadh.

This move is expected to deliver tens of thousands of affordable residential plots annually to citizens, following a significant rise in property prices in Riyadh.

According to Saudi Minister of Municipal and Rural Affairs and Housing Majid Al-Hogail, these measures will add between 10,000 and 40,000 plots of land annually in the northern region of Riyadh, ensuring a better balance between supply and demand in the market.

The Crown Prince has already donated 1 billion riyals to the National Developmental Housing Foundation (Sakan), represented by Jood Eskan, to support home ownership for eligible families across Saudi Arabia.

The housing projects funded by this donation are to be completed within 12 months and executed by national companies.

The Crown Prince also ordered monthly progress reports to ensure that all residential units are delivered within one year.

Real estate market experts told Asharq Al-Awsat that current market data reveals a stagnation in property purchases by citizens, as they await the impact of recent policy changes and their potential to restore balance to the market.

Many real estate companies and agencies have observed a decline in sales activity, with property marketers facing difficulties in encouraging buyers who prefer to delay decisions until the effects of Crown Prince Mohammed bin Salman’s directives take shape.

Real estate expert and marketer Abdullah Al-Mousa told Asharq Al-Awsat that the current stagnation in property prices in Riyadh is a direct result of the Crown Prince’s initiatives to increase property supply, which aim to restore price equilibrium following the recent surge in real estate costs.

He views the decline as a positive step toward balancing supply and demand, contributing to a more sustainable and fair market for all stakeholders.

Al-Mousa anticipates that this stagnation will persist until all government directives are fully implemented in the coming months.

He noted that, with plans to increase the property supply, the market could experience gradual recovery in the long term, especially given Riyadh’s continued population and economic growth.

The expert highlighted that several factors may sustain the current stagnation, including high interest rates, which reduce citizens’ purchasing power, the oversupply of properties relative to demand, and global economic fluctuations that could affect investments.

However, he emphasized that Riyadh’s ongoing population growth, improving national economy, rising per capita income, large-scale infrastructure projects like the Riyadh Metro, and continued government support for housing programs are expected to drive the recovery of the real estate market.

Al-Mousa also predicted further improvement in the sector as policies are implemented and market conditions are monitored.