CBRE Middle East’s Residential Market Notes state that Saudi Arabia’s residential real estate market has gained massive traction in the last year.
During the period from Q2 2023 to Q2 2024, record growth in transaction volumes has been seen, with increases of 51.6% in Riyadh, 43.2% in Jeddah, and 22.4% in the Dammam
Metropolitan Area (DMA)
This transaction spike is primarily because buyers had high expectations of actually receiving new, modern housing stock, which would be superior in quality to the older variety. Access to an increasing supply of financing options has also opened doors for more investors to enter the market. Several buyers, though, are holding their breath and hoping for improved mortgage terms and conditions, even as the government works on improving mortgage facilities via local banks.
Riyadh Residential Market Emerges
Similar growth has been witnessed in apartment prices in Riyadh, up 11.7 percent year on year since Q3 2020. At the end of Q2 2024, prices reached an average of SR5,000 ($1,300) per square meter. Indeed, villa prices in Riyadh have also been on an upward trajectory to reach SR5,824 ( $1,600) per square meter with steady growth from 2019 despite slight corrections in 2020 and 2021.
The mixed market trend of Jeddah
Meanwhile, Jeddah’s real estate has polarized. The average apartment price decreased 0.9% in the year to Q2 2024, though since 2020 the sales values have grown at a compound annual growth rate of 2.6%. Meanwhile, its villa prices reached a low of SR 4,639 (1,200) per square meter in Q4 2020 and have since risen to SR 5,707 (1,500) per square meter, a healthy compound annual growth rate of 4.4%.
Growth in Riyadh’s Rental Market
The renting activity in Riyadh has also remained in positive growth, with total rental transactions increasing 6.1% YTD compared with the same period in 2023. On the other hand, apartment rental transactions in Jeddah went down 2.3%, which is blamed on the relatively lower activity recorded in May 2024. Rental activity in Riyadh and Jeddah fluctuates partly in response to the government’s push to encourage registration on the EJAR platform—a system designed to regulate rental agreements between landlords and tenants.
Top Districts for Residential Properties
Within the capital Riyadh, Hittin and Al Malqa had the highest average residential prices, while As Suwaidi and Al Aziziyah were the most inexpensive locations within the center. For Jeddah, the top two villa prices belonged to Ash Shati and Al Murjan; the least expensive ones remained in Al Amir Fawwaz. Luxury dwellings along the Red Sea, such as in Obhur Al Junobiyah, kept demanding high prices, while Ar Rayyan kept options open for people with medium budgets.
Market Outlook: Growth to Continue
Matthew Green, Head of Research MENA at CBRE, said, “The Saudi Arabia Residential Sector remains buoyant, with sustained rental growth recorded in the main cities.” These have been exacerbated by rapid rises in jobs and population, he added, driven by government-backed investment schemes. While new deliveries keep failing to catch up with the demand for housing, experts believe that the competitiveness of the Saudi real estate market will hold, particularly in districts where demand is high.
