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JLL’s recent report on KSA Real Estate Market Dynamics points out that Saudi Arabia’s real estate market has remained strong and experienced substantial growth, especially in terms of hospitality and residential. The growth signifies the Kingdom’s determination to diversify its economy, by working towards the targets outlined in Vision 2030.
Major Expansion in the Residential Sector
In Saudi Arabia, there has been an evident rise in the residential market as sales transactions in Riyadh grew by 51.6% during the second quarter of 2024 in comparison with that of 2023. This is shown in the total number of transactions where 18,500 were recorded in the capital city alone. Other major cities notably other cities such as Dammam and Jeddah have also seen massive year-on-year increases; recorded at 22.4% for Dammam and 43.2 % for Jeddah respectively in relation to residential dealings.
This healthy activity is in part supported by the government’s initiatives aimed at promoting ownership of houses to the citizens of Saudi Arabia. For instance, the National Housing Programme targets to achieve a home ownership level of 70% by 2030, starting from 47% in 2016. In order to attain this goal, the authorities have set aside vast amounts of land for residential development purposes and also introduced several measures of financial assistance that are meant to ease purchase of homes.
The hospitality sector continues to perform well
The hospitality industry has continued to thrive with new hotels springing up and occupancy rates rising in major towns. This can be attributed mainly to the increasing number of tourists from outside the country including those visiting Saudi Arabia for business or tourism prompted by diversification measures adopted by the kingdom towards enhancing such activities as well as improving its economy. A strong performance by this sector is viewed as an encouraging sign for economic growth overall and also to make it more attractive for leisure and businessmen visiting Saudi Arabia.
Office Market Trends
Moreover, the office together with residential and hospitality areas in Saudi Arabia have exhibited encouraging tendencies. Especially in Riyadh; demand for good office space is still alive and kicking resulting in a sharp increase in average rents. According to CBRE’s current report, rental prices for Prime grade A and B offices in Riyadh experienced an upsurge of 10.7%, 11.5% and 14.6% respectively on an annual basis. The surge can be attributed to the escalating number of both locals as well as aliens occupying space within the city.
Industrial and Logistics Sector
National Industrial Development and Logistics Program (NIDLP) is a key factor behind growth in the industrial and logistics sectors. This growth has been witnessed through an increase in the areas within MODON that are set aside for logistics, which reached 4.8 million square meters, as of Q2 2024. Among other things, this expansion is meant to increase local participation in addition to attracting both local and foreign investments within the industrial sector.
Challenges and Future Outlook
Saudi Arabia Real Estate Market is facing some challenges despite strong performance across various sectors. One of the key issues is inadequate high-quality stock. Nevertheless, industry experts anticipate that such supply constraints will begin to ease in the medium term as new projects come online while others are completed.
Thus, the Saudi real estate sector is still exercising short-run growth as well as resistance and stability because of considerable activity in housing and hospitality. In the light of this, it is possible that real estate will still form a major area of focus in the Kingdom’s economic diversification strategy as she pursues Vision 2030 aspirations. The market will keep on gaining ground over the next few years due to various reasons including continued government support and new plans that aim at revitalizing it.
