RIYADH: Saudi Arabia’s residential real estate sector is demonstrating increased maturity and resilience, driven by evolving end-user preferences and government-led initiatives, a new JLL report said.

The latest market dynamics report for the second quarter of 2025 from the real estate consultancy revealed a nuanced yet dynamic landscape across key urban centers, with Riyadh and Jeddah poised to add 27,540 new residential units by the end of the year. 

This comes as the Kingdom’s real estate market maintained steady growth in the second quarter, with overall property prices rising 3.2 percent year on year, and residential property costs recorded a 0.4 percent increase, according to data from the General Authority for Statistics.

“The Saudi Arabian residential market is maturing, reflecting a dynamic landscape driven by the Kingdom’s broader objectives to meet end-user needs,” said Saud Al-Sulaimani, country lead and head of capital markets at JLL Saudi Arabia.

“While ongoing government initiatives have led to strong underlying demand, the sector is poised for further evolution and diversification, catalyzed by the upcoming foreign ownership law to be implemented in January 2026,” he added.

According to the report, Riyadh continued to lead across the Kingdom, recording a 15.1 percent annual increase in villa sales prices and a 13.3 percent rise in apartment prices. Rental rates in the capital also climbed, with villas up 13.9 percent and apartments by 6.9 percent.

Jeddah’s market showed a more varied performance. While villa prices increased by 4.4 percent, apartment prices saw a slight decline of 3 percent. The city also experienced a significant 46.1 percent year-on-year rise in sales transaction volumes, underscoring strong underlying demand.

The Dammam Metropolitan Area, comprising Dammam, Alkhobar, and Jubail, continues to attract residents with its waterfront appeal and high-quality compounds.

Alkhobar stood out with a 23.7 percent increase in sales transactions, while Dammam saw a 6.7 percent decline. Apartment prices in Alkhobar rose by 5.8 percent, with villas up 2.2 percent.

Transactional activity varied widely across the Kingdom, the report said, adding: “Jeddah and Alkhobar demonstrated robust growth in sales transactions, while Riyadh and Dammam experienced slight declines.” 

Apartments dominated market activity, accounting for over 80 percent of transactions in most cities, reflecting a shift toward affordability and changing lifestyle preferences.

Master-planned communities are reshaping future supply, particularly in Riyadh and Jeddah, where development is expanding northward. These integrated communities are increasingly favored for their amenities and holistic living environments.

Riyadh’s total residential stock reached 2.17 million units after the delivery of 5,600 units in the first half of 2025, with another 18,900 expected by year-end. Jeddah’s stock rose to 1.23 million units, with 8,640 new units anticipated. In the Dammam Metropolitan Area, 1,740 units were delivered in the first half, bringing total stock to 725,400 units, with an additional 860 expected. 

The report highlighted the promising impact of the foreign ownership law and continued demand driven by population growth, economic diversification, and homeownership initiatives. Developers are encouraged to focus on amenity-rich, high-end communities, particularly in the Dammam Metropolitan Area, to meet rising expectations for quality living environments.

JLL’s analysis confirms that Saudi Arabia’s residential market is not only stable but strategically positioned for sustained growth, innovation, and international investment in the years to come.

In its latest market overview, published a few days before the JLL report, Knight Frank said that Saudi Arabia’s residential market recorded nearly 93,700 deals in the first half of the year, a 7 percent year-on-year increase, driven by strong mortgage activity and government support.

The segment accounted for 63 percent of total real estate activity in the Kingdom, with transactions valued at SR77.5 billion ($20.6 billion), the consultancy said.