Saudi Arabia: Real Estate Deals for Small Residential Units Increased by 151%

A building offering small housing units in Riyadh. (Dar Al Arkan Real Estate)
A building offering small housing units in Riyadh. (Dar Al Arkan Real Estate)
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Saudi Arabia: Real Estate Deals for Small Residential Units Increased by 151%

A building offering small housing units in Riyadh. (Dar Al Arkan Real Estate)
A building offering small housing units in Riyadh. (Dar Al Arkan Real Estate)

The Saudi real estate market has recently seen an increased demand for small residential units, ranging in size from 30 to 65 square meters, with real estate transactions for these units surging by 151% during the first three quarters of 2024 compared to the same period last year.

In comments to Asharq Al-Awsat, real estate experts and specialists attributed this trend to four main factors. They pointed out that the future in major cities like Riyadh, Makkah, Madinah, Jeddah, and al-Dammam lies in small residential units, which will create new investment opportunities for developers, allowing them to expand their portfolios.

Real estate expert and appraiser Engineer Ahmed Al-Faqih stated that the future in major cities is for small apartments with an average size of 35 square meters. He added that most sales by developers and marketers in large cities are concentrated in small units, consisting of one or two rooms and studios.

Al-Faqih attributed this shift to four main reasons: changes in the demographic structure of major cities, especially Riyadh and Jeddah, due to large-scale migration, improved quality of life, and increased job opportunities.

These households tend to be smaller, with an average of three members. Additionally, new social groups are emerging, including women (either divorced or working women from outside the cities) and men who prefer independent living.

The third reason is a shift in social habits, with newlyweds and young families opting for fewer children and often waiting more than three years to have their first child, after achieving financial and housing stability.

The fourth factor is the rising cost of housing in major cities, leading smaller families and individuals to prefer smaller units, he explained.

Al-Faqih supported his points with data, indicating that real estate transactions for units sized between 30 and 65 square meters doubled, with the number of transactions rising from 242 units in the first three quarters of 2023 to 608 units during the same period this year, signaling a strong preference for this type of housing.

Real estate advisor and expert Al-Aboudi bin Abdullah described small residential units as a “rising star” in the Saudi real estate market.

In an interview with Asharq Al-Awsat, he said these units have successfully attracted both developers and investors, offering an innovative and intelligent solution to the growing demand for housing. This trend aligns with the dynamic transformations in the Saudi real estate market and combines flexibility, efficiency, and sustainability.

Abdullah emphasized the need for diverse housing options driven by social and economic shifts in the Kingdom. He noted that younger generations of Saudis increasingly prefer independent, flexible living arrangements that meet their individual needs at prices suited to their purchasing power.

Abdullah also pointed out that population growth and the increasing influx of employees from international companies and investors have significantly boosted demand for small units in key cities like Riyadh, Jeddah and al-Dammam.

Demand for such units is expected to continue rising, which will reduce pressure on larger housing units and open up new investment opportunities in the real estate sector, he noted.



Indian State Refiners May Buy Mideast Spot Oil to Replace Russian Shortfall

A worker rides a bicycle at the Bharat Petroleum Corporation refinery in Mumbai, April 24, 2008. REUTERS/Punit Paranjpe/FILE PHOTO
A worker rides a bicycle at the Bharat Petroleum Corporation refinery in Mumbai, April 24, 2008. REUTERS/Punit Paranjpe/FILE PHOTO
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Indian State Refiners May Buy Mideast Spot Oil to Replace Russian Shortfall

A worker rides a bicycle at the Bharat Petroleum Corporation refinery in Mumbai, April 24, 2008. REUTERS/Punit Paranjpe/FILE PHOTO
A worker rides a bicycle at the Bharat Petroleum Corporation refinery in Mumbai, April 24, 2008. REUTERS/Punit Paranjpe/FILE PHOTO

Indian state refiners are considering tapping the Middle East crude market as spot supply from their top supplier Russia have fallen, three refining sources said, in a move that could support prices for high-sulphur oil.
The three large state refiners- Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum- are short of 8-10 million barrels of Russian oil for January loading, the sources told Reuters.
The refiners fear continued problems in securing Russian oil in the spot market could continue in coming months as Moscow's own demand is rising and it has to meet commitments under the OPEC pact.
However, they added that they can draw from their inventories to meet crude processing needs in March.
Two of the sources said their company may lift more crude from Middle East suppliers under optional volumes in term contracts or to float a spot tender for high-sulphur oil.

IOC, the country's top refiner, previously floated spot tenders to buy sour grades in March 2022.
The companies did not immediately respond to requests for comment.
India became the largest importer of Russian crude after the European Union, previously the top buyer, imposed sanctions on Russian oil imports in response to the 2022 invasion of Ukraine. Russian oil accounts for more than a third of India's energy imports.
Russia's spot crude exports since November as its refineries resumed operations after the maintenance season and poor weather disrupted shipping activities, traders said.
“We have to explore alternative grades as Russia's own demand is rising and it has to meet its commitments under OPEC,” said another of the three sources.
Russia, an ally of the Organization of the Petroleum Exporting Countries, promised to make extra cuts to its oil output from the end of 2024 to compensate for overproduction earlier.
Also, most supplies from Russia's state oil firm Rosneft are tied up in a deal with Indian private refiner Reliance Industries, Reuters reported earlier this month.
The new deal accounts for roughly half of Rosneft's seaborne oil exports from Russian ports, leaving little supply available for spot sales, sources told Reuters earlier this month.
India has no sanctions on Russian oil, so refiners there have cashed in on supplies made cheaper than rival grades by the penalties by at least $3 to $4 per barrel.
Sources said there are traders in the market that are willing to supply Russian oil for payments in Chinese Yuan but noted that state refiners stopped paying for Russian oil in the Chinese currency after advice from the government last year.
“It is not that alternatives to Russian oil are not available in the market but our economics will suffer,” the first source said.
Oil prices rose on Tuesday, reversing the prior session's losses, buoyed by a slightly positive market outlook for the short term, despite thin trade ahead of the Christmas holiday.
Brent crude futures were up 42 cents, or 0.6%, to $73.05 a barrel, and US West Texas Intermediate crude futures rose 38 cents, or 0.6%, to $69.62 a barrel at 0742 GMT, Reuters reported.
FGE analysts said they anticipated the benchmark prices would fluctuate around current levels in the short term “as activity in the paper markets decreases during the holiday season and market participants stay on the sidelines until they get a clearer view of 2024 and 2025 global oil balances.”
Supply and demand changes in December have been supportive of their current less-bearish view so far, the analysts said in a note.
“Given how short the paper market is on positioning, any supply disruption could lead to upward spikes in structure,” they added.
Some analysts also pointed to signs of greater oil demand over the next few months.
“The year is ending with the consensus from major agencies over long 2025 liquids balances starting to break down,” Neil Crosby, Sparta Commodities' assistant vice president of oil analytics, said in a note.
Also supporting prices was a plan by China, the world's biggest oil importer, to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, as Beijing ramps up fiscal stimulus to revive a faltering economy.
China's stimulus is likely to provide near-term support for WTI crude at $67 a barrel, said OANDA senior market analyst Kelvin Wong.