RIYADH: Over only 12 months, Australia’s build-to-rent market jumped 35 percent, reaching a capital value exceeding $30 billion, according to a report by the Property Council of Australia in August.
Prior to this period, the market was valued at $21 billion, offering 29,000 housing units — compared with nearly 30,000 apartments today.
The model, which Saudi Arabia’s Ministry of Housing previously announced it would implement in partnership with National Housing Co., or NHC, along with other developers to launch a program aimed at increasing supply, is estimated to have a global market value of around $670 billion, according to British consultancy Addleshaw Goddard, which advises more than 5,000 clients worldwide.
Speaking to Al-Eqtisadiah, real estate experts describe the build-to-rent model as an economic and organizational shift that could reshape the Saudi housing market toward greater balance, professionalism, and sustainable growth.
How it all started
The build-to-rent system emerged as a modern concept in 2008 amid the global financial crisis, responding to shifting housing market dynamics. It gained momentum in the early 2010s, with the UK establishing the Build-to-Rent Fund in 2012.
Last year, the UK’s build-to-rent housing market hit a record $5.2 billion, up 11 percent year on year, capturing 13 percent of the overall housing market.
In the US, data from global real estate firm Cushman & Wakefield shows build-to-rent sales rose 40 percent in 2023 compared with 2019.
Hamoud Saud Al-Subaie, founder of property platform HissaTech, told Al-Eqtisadiah that UK build-to-rent projects helped address the rental crisis.
“This model enabled the construction of high-quality residential complexes at relatively stable prices and allowed the government to reduce average rents by more than 12 percent in some areas,” he said.
How institutionalization affects rents
Al-Subaie expects the model to increase institutional rental supply, reducing reliance on fragmented individual markets and promoting professionalism in unit management.
In addition to improving tenants’ quality of life, the expert said the model mitigates rental volatility and opens long-term investment opportunities for developers and investment funds.
In Saudi Arabia, the Ministry of Housing and NHC aim for the program to expand housing supply and offer more options to citizens and investors, focusing on large-scale rental developments.
Al-Subaie described the initiative, targeting thousands of units, as “a confident step toward developing the rental housing market and a long-awaited strategic leap.”
Will it succeed in Saudi Arabia?
Al-Subaie stresses that the success of the build-to-rent approach requires genuine partnerships with the private sector to ensure it delivers results, “with the developer being part of the solution, not just an executor.”
He added that the model also needs government support, including access to affordable, subsidized land — especially in high-demand cities — and financial and regulatory incentives to encourage investors to participate.
“In Australia, the government offered incentives to developers to build rental units, which helped stabilize market pricing and encouraged investors to adopt a long-term yield model rather than short-term speculation,” he said.
The real estate expert also highlighted the importance of full digital integration with platforms such as Ejar, Balady, and Sakani to enhance transparency and pave the way for hybrid ownership models in the future, such as rent-to-own or partial ownership through licensed real estate funds or platforms.
Ridha Al-Matrafi, founder of real estate platform Thki, called the program a qualitative step reflecting the maturity of Saudi Arabia’s housing market.
“Government rental units ease price pressure, creating a balance long awaited by both tenants and investors,” Al-Matrafi said, adding that in the short term, this may curb excessive daily rent fluctuations.
Over the long term, Al-Matrafi expects it to encourage more stable annual contracts.
Success, he added, requires clear regulations and effective management to ensure units remain sustainable and serve citizens at a high quality.
The most notable impact, he said, would be strengthening confidence in the rental market, turning it from a temporary solution into a viable housing option on par with ownership.
Could the program turn into a speculative tool?
While Omar Sabbour, an investor, highlighted the model’s benefits — increasing supply, lowering prices, improving quality, and stabilizing contracts — he stressed the need for mechanisms to define target groups and prevent the program from being used for speculative purposes.
“Success depends on clear legislation, private sector partnership, and strict monitoring of quality and prices,” he said.
Sabbour cited international examples, including Germany, where developers build long-term rental units, stabilizing prices thanks to abundant supply, supported by tax exemptions and low-interest financing.
In Singapore, the government builds and rents housing at subsidized rates to ensure quality construction and fair distribution, helping reduce housing poverty and promote social stability.
In France, municipalities provide rental units at affordable rates for middle- and low-income groups, partially funded by taxes and managed transparently under the social housing system, known as Logement Social, Sabbour noted.
