RIYADH: Saudi Arabia’s real estate price index rose by 2.6 percent in the third quarter of 2024 compared to the same period last year, driven by growth in residential sector expenses, according to official data.
The General Authority for Statistics said that residential real estate prices increased by 1.6 percent year on year in the third quarter. Meanwhile, commercial and agricultural sector property expenses rose by 6.4 percent and 8.7 percent, respectively.
Developing the real estate sector is a key component of Saudi Arabia’s Vision 2030, as the Kingdom works to become a global tourism and business destination by the decade’s end.
The Real Estate General Authority anticipates that Saudi Arabia’s property market, one of the Middle East’s fastest-growing sectors, will reach a market volume of $69.51 billion in 2024 and $101.62 billion by 2029, with a projected compound annual growth rate of 8 percent.
“Data indicates that real estate prices in the residential sector experienced varying increases in the third quarter of 2024 compared to the same quarter of the previous year. The residential sector recorded an overall increase of 1.6 percent, with a weighting of 72.6 percent in the index,” said GASTAT.
It added: “This rise was largely driven by a 1.6 percent increase in the prices of residential land plots, which carry a weighting of 45.7 percent in the index.”
The report said that apartment prices increased by 1.9 percent year on year in the third quarter, while expenses to purchase villas rose by 1.5 percent. In the same period, prices of residential floors saw a decrease of 1.8 percent.
In the commercial real estate sector, land plots witnessed a price rise of 6.3 percent year on year in the third quarter.
Building prices in the commercial sector saw an increase of 8.6 percent in the third quarter of this year, compared to the same period in 2023, while the expenses for gallery and shops declined by 1.1 percent.
Compared to the second quarter, the overall real estate price index rose by 0.8 percent in the third quarter, with a 0.2 percent increase in the residential sector.
“The prices of real estate in the commercial sector increased by 3 percent, driven by a 3.2 percent rise in commercial land plot prices, a 0.4 percent increase in building prices, and a 2.4 percent increase in gallery/shop prices,” said the report.
Real estate prices in Riyadh saw a significant 10.2 percent increase in the third quarter of 2024 compared to the same period last year, GASTAT reported.
The Hail region and the Northern region also recorded notable annual increases, at 5 percent and 1.7 percent, respectively, while the Makkah region and Eastern Province experienced year-on-year declines of 1.3 percent and 8.3 percent.
Earlier this month, a report released by Knight Frank revealed that residential transaction values in Saudi Arabia surged 25 percent year on year in the third quarter of 2024, totaling SR35.4 billion ($9.43 billion).
The report added that the volume of deals also increased by 12 percent, reaching 45,924 deals, highlighting strong demand in the Kingdom’s housing market.
This trend follows a continued increase in demand over the last several quarters, as the Kingdom experiences growth in both local and expatriate populations amid efforts to attract investment and advance diversification projects.
Supporting this growth, JLL reported that Riyadh’s Grade A office rents reached SR2,090 per sq. meters by mid-2024, an increase from the same period in 2023. Approximately 52,000 sq. meters of new office space was delivered in the first half of the year, bringing Riyadh’s total supply to 5.2 million sq. meters.
Grade A office spaces enjoy a premium over the average rent prevailing in the area due to their location, infrastructure and young age.
JLL projected that approximately 249,000 sq. meters and 48,000 sq. meters of gross leasable area is expected to be delivered in Riyadh and Jeddah, respectively, in the second half of this year.
