The Saudi Arabia real estate market is projected to experience significant growth, with its market size expanding considerably.
According to Mordor Intelligence, the Saudi Arabia real estate market size is estimated at $69.51 billion in 2024, and is expected to reach $101.62 billion by 2029, growing at a CAGR of 8%.
The Saudi Arabia real estate market size is expected to grow from $ 64.43 billion in 2023 to $ 94.19 billion by 2028, at a CAGR of 7.89% from 2024 to 2029.
Saudi Arabia’s residential real estate market is experiencing robust growth, marked by a continuous increase in new residential units and mortgages, aligning with the country’s homeownership objectives.
The flourishing residential real estate sector in the kingdom mirrors sturdy growth fundamentals and a predominantly youthful population exceeding 35 million individuals, as outlined in S&P Global Ratings’ latest report titled ‘Saudi Residential Real Estate: The Market Is Booming.’
According to S&P’s analysis, the economic indicators and population expansion in Saudi Arabia are anticipated to remain robust. “We anticipate that Saudi Arabia’s economic indicators and population growth will remain strong, and that the demand for residential mortgages will be supported by new household formations and decreasing interest rates,” affirmed S&P Global Ratings credit analyst Sapna Jagtiani.
Furthermore, S&P predicts that the demand for residential real estate will persist at elevated levels, particularly in Riyadh and Jeddah, propelled by robust population growth averaging 3.3% between 2024 and 2027, driven by internal migration and to some extent by expatriate inflows.
As per S&P’s assessment, residential real estate prices, rents, and mortgage growth in Saudi Arabia continue to surge, propelled by new household formations and declining interest rates. Sales prices in Riyadh and Jeddah observed year-on-year increases of 10% and 5%, respectively, during the first half of 2024, according to JLL’s KSA Market Dynamics Report H1 2024.
Rental yields also remain buoyant, exhibiting year-on-year growth rates of 9% in Riyadh and 4% in Jeddah. The total number of real estate transactions across all asset categories surged by 38% to slightly over 106,700 in the first half of 2024, with their total value soaring by 50% to SAR127.3 billion, according to Knight Frank’s Saudi Arabia Residential Market Review – Summer 2024.
In this context, Mohamed Talaat, Architectural Consultant and Chairman of Mohamed Talaat Architects, emphasized that Saudi Arabia has emerged as a key regional hub for real estate investments.
Talaat highlighted that the real estate landscape in Saudi Arabia has evolved beyond conventional construction practices, focusing on enhancing quality of life, fostering technological innovation, and promoting sustainable investments in the construction sector. These strategic shifts have empowered the Kingdom with significant competitive advantages in the real estate investment sphere over recent years, aligning with the objectives of Vision 2030.
This progress has been propelled by the seamless collaboration between governmental bodies and private enterprises, working in tandem to elevate Saudi Arabia’s profile as a globally appealing destination for real estate investments, blending innovation and sustainable development within an ambitious vision that reshapes the future of real estate in the Kingdom.
Furthermore, Talaat underscored the remarkable diversity characterizing the Saudi real estate market, credited to the Kingdom’s adoption of a more diversified investment approach, particularly within the domains of hospitality and tourism. With tourism emerging as a lucrative investment domain due to a substantial rise in visitor numbers, exceeding 100 million last year, Saudi Arabia is witnessing a surge in real estate tourism projects spanning conference, religious, and exploratory tourism sectors.
Concurrently, Talaat highlighted the pivotal role played by the Real Estate General Authority in fortifying urban development foundations within the Kingdom. By enacting legislation and regulations that promote market stability and enhance its investment appeal, the Authority has significantly bolstered the real estate sector. These regulatory frameworks have been instrumental in attracting investments surpassing SAR180 billion during the Cityscape Global exhibition, underscoring a mounting confidence in the Saudi real estate market.
In conclusion, the Saudi Arabian real estate market is poised for substantial growth. Driven by robust economic fundamentals, a youthful population, and increasing demand for residential properties, particularly in Riyadh and Jeddah, the sector is experiencing rising prices and strong rental yields. The Kingdom’s focus on innovative and sustainable development, alongside supportive government policies, positions it as a key regional hub for real estate investment. With tourism further diversifying the market, confidence in Saudi Arabia’s real estate landscape continues to strengthen, aligning with the ambitious goals of Vision 2030.