Saudi Arabia’s real estate sector witnessed a surge in demand during the first half of 2024, with the total number of transactions rising 38 percent to just over 106,700. The total value of the deals rose 50 percent to SAR127.3 billion ($33.92 billion) during the same period.
According to the latest report from Knight Frank, residential real estate transactions, which accounted for 61 percent of Saudi Arabia’s real estate deals by total value, registered a 41 percent increase in the number of deals to just under 91,860 sales. Meanwhile, the value of residential transactions increased by 48 percent to SAR77.6 billion over the same period.
Riyadh leads growth
Riyadh continues to stand out among Saudi Arabia’s major cities. Initiatives such as Program HQ continue to drive residential real estate demand in Saudi Arabia’s capital from those being recruited into expanding businesses, or those relocating their regional HQs to Riyadh.
Over the last 12 months, residential real estate transaction volumes in Riyadh rose by 49 percent, compared to 27 percent in Jeddah, 29 percent in the Dammam Metropolitan Area (DMA), and 21 percent in Madinah. Makkah was the only city in Saudi Arabia where real estate transaction volumes declined by 6 percent.
While average apartment prices hit a new record at SAR5,530 per square meter, up 8 percent year-on-year, this masks the 3 percent rise during Q2. Average villa prices in Riyadh increased by 7.9 percent year-on-year to SAR 5,155 per square meter.
Dammam, Jeddah experience notable growth
Residential transactions in DMA saw a significant annual rise of 29 percent, rising from 1,891 deals in Q2 of 2023 to 2,439 deals in Q2 of 2024. The value of these transactions grew by 25 percent during the same period to SAR2.97 billion. Despite the considerable rise in deal activity, average prices for villas and apartments remained relatively stable.
The housing market in Jeddah experienced slightly slower growth when compared to Riyadh. The number of residential sales rose by 27 percent, from 4,119 deals in Q2 of 2023 to 5,223 deals in Q2 of 2024. The total value of deals, however, increased by 38 percent, signaling a significant rise in prices.
Government initiatives drive sales
The report attributes the rise in residential real estate transactions in Saudi Arabia to several factors. In 2023, over 96,000 families benefited from the Kingdom’s housing program, which helps to facilitate access to affordable home financing solutions.
In addition, more than 20,000 families received aid through homeownership tracks via the development housing program, which offers eligible families and those who need usufruct rights on homes donated through the government’s housing support portal.
Boost in Saudi homeownership
Government initiatives that seek to boost housing supply and affordability have also been instrumental in driving up sales activity this year. Saudi Arabia launched multiple housing projects under the Sakani and Wafi programs, for example, to boost homeownership among nationals, with these efforts now extending to secondary and tertiary cities across the country.
By the end of 2023, the percentage of Saudi homeowners had reached 63.74 percent, a 16.7 percentage point increase from 2016, when the National Transformation Plan was unveiled, and also ahead of the government’s 2023 target of 63 percent.
Read: Saudi Arabia’s residential real estate prices rise 2.8 percent in Q2 2024
Market opens to international buyers
The total number of mortgages issued for home ownership between January and May 2024 increased by 6.7 percent, compared to a decline of 35 percent over the same period last year. In addition, the total value of mortgages issued increased by 3.9 percent to SAR 36.2 billion during the same period.
Separately, the introduction of regulations allowing foreign investors to own real estate in Saudi Arabia through new Premium Residency Visa options has also opened the market to international buyers, further driving demand.
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