RIYADH: Residential transaction values in Saudi Arabia surged 35 percent over the past 5 years to reach SR164.8 billion ($43.94 billion), according to a report from Knight Frank.
The findings showed that these deals, which accounted for 61.5 percent of all real estate agreements by total value, registered a 38 percent increase in the number of sales to just under 202,661 during the same period.
This falls in line with the Kingdom’s Vision 2030 goal to reach a 70 percent homeownership rate by 2030. It also aligns well with Saudi Arabia’s commitment to supporting access to affordable, quality housing for all citizens.
“Undoubtedly, the next big area of focus for developers will be on creating new and additional sources of demand, which may soon materialize in the much-anticipated change in foreign ownership laws,” Partner and Head of Research in the Middle East and North Africa region Faisal Durrani said.
“We continue to march toward an eventual and much-anticipated easing in international ownership laws in the Kingdom. The recent change in investor rules allowing international investors to access the property markets in the Holy Cities through listed companies, announced in January, will help to begin addressing the pent-up demand from international investors hungry to access real estate markets in the Kingdom’s Holy Cities,” he added.
The study further revealed that several factors have contributed to the growth of residential real estate transactions in Saudi Arabia in recent years. In 2023, over 96,000 families benefited from the Kingdom’s Housing Program, which provides access to affordable home financing options. By the first half of 2024, another 55,000 families had gained from this initiative.
The release further revealed that despite record-high prices in cities like Riyadh, 45 percent of affluent Saudis are still eager to buy a home this year.
It also indicated that while the domestic homeownership rate is nearing the government’s 70 percent target for 2030, rising borrowing costs and escalating house prices are dampening demand.
Knight Frank’s survey, conducted with YouGov and covering 1,037 households in the Kingdom — including 100 Saudi-based expats — highlighted a reduced interest in property purchases among first-time and current homeowners.
“What we are experiencing now is an organic slowing in demand as the 70 percent home ownership target approaches and as residential values start to peak in the current cycle. The rampant house price growth across the country, too, is curbing the appetite to purchase,” Regional Partner in Strategy and Consulting in Saudi Arabia at Knight Frank, Harmen de Jong, said.
“This has been evidenced by our survey results, as among our respondents, just 33 percent plan to buy a home or upgrade their accommodation in 2025, which is down on the 40 percent figure we recorded in 2023, which underscores the success the authorities have had in boosting home ownership levels,” he added.
The analysis unveiled that first-time buyers’ demand for home purchases has decreased to 29 percent, down from 40 percent in 2023 to 84 percent in 2022.
The property firm highlighted that the government’s initiatives to increase homeownership among Saudi nationals, which reached 63.7 percent by the end of 2023, are now bringing the target of 70 percent by 2030 within close reach.
In Riyadh, apartment prices have increased by 75 percent over the past five years, while villa prices have risen by 39 percent during the same timeframe.
The high-interest-rate environment, with current levels at 5 percent compared to 1 percent in 2021, is further contributing to the growing factors reducing demand.
