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Top 5 Saudi Arabia Real Estate Market Trends

Published on September 02, 2024

The Saudi Arabian real estate market is booming. Across the Kingdom, projects worth an estimated $1.06tn are planned or under construction. The country makes up over 60% of the total real estate project value in the Middle East.

Driven by government initiatives, evolving consumer preferences, and global influences, the market is evolving. These factors are creating fresh opportunities for investors. In this guide, we'll explore the top 5 key trends in the Saudi Arabian real estate market.

1.Luxury Real Estate Boom

As the economy expands and disposable incomes increase, there's a clear move towards more luxurious homes. This trend is reflected in increasing average villa prices in cities like Riyadh and Jeddah.

Alongside luxury properties, there's a growing preference for modern living spaces that suit contemporary lifestyles. This trend is driven by younger Saudis who are increasingly looking for homes with smart home technologies and energy-efficient designs.

2. Ecommerce Growth Driving Property Demand

The ecommerce market is thriving in Saudi Arabia. The projected ecommerce market volume is expected to reach $24.29bn by 2029, with an annual growth rate of 11.05%:

This rapid growth is driving demand for modern warehousing and distribution centres. As online shopping grows, companies require storage, processing, and shipping facilities. Cities like Riyadh, Jeddah, and Dammam are expanding their logistics networks to meet this demand and support economic growth.

3.Expanded Opportunities for Foreign Investors

A key development in Saudi Arabia's real estate market is the expansion of foreign ownership rights. This is part of government initiatives to encourage foreign investment. From 2015 to 2023, the value of foreign investments in the Kingdom increased by 137%:

Historically, foreign investors were restricted from owning property in certain areas, especially in Makkah and Madinah. The Saudi government has revised many of these regulations to allow more extensive foreign ownership.

4.High-Yield Investment Opportunities

One of the standout features of Saudi Arabia's real estate market is its attractive investment yields. In 2024, yields ranged between 6.75% and 8.75%, positioning the Kingdom as a highly competitive player on the global stage.

The commercial sector is particularly strong, with increased demand for office spaces, retail outlets, and industrial facilities. These high yields are attracting international investors and fueling the market's growth.

5.Strategic Government Initiatives Fueling Growth

Programs like Sakani are making homeownership more accessible to Saudi citizens. As part of its Vision 2030, Saudi Arabia aims to increase homeownership to 70% by 2030. To achieve this, the government has launched several initiates to support the housing sector.

The Saudi Real Estate Refinance Company (SRC) is set to refinance 20% of the residential mortgage market by 2025. The Saudi central bank reduced the minimum down payment for property purchases from 30% to 5%. This is making it easier for first-time buyers to enter the market.

The government has also implemented tax reforms, including a 5% real estate disposal tax and the "White Land Tax" to stimulate development and increase housing supply.

Conclusion

Saudi Arabia's real estate market is at the heart of the Kingdom's Vision 2030. With strong government support and growing demand, the market is set to experience significant growth in the coming years.

If you want to learn more about the best real estate opportunities in Saudi Arabia, make sure you attend Cityscape Global 2024. The world's largest real estate event takes place in Riyadh, Saudi Arabia, Nov 11-14, 2024.

Whether you're interested in cutting-edge developments like NEOM or emerging urban hotspots, Cityscape Global 2024 will give you the insights and connections you need to thrive in the booming Saudi Arabian real estate market.