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Arab News
15-04-2025
- Business
- Arab News
Saudi real estate prices rise 4.3% in Q1 on residential sector gains: GASTAT
RIYADH: Saudi Arabia's real estate market maintained its growth trajectory in the first quarter of 2025, with overall property prices climbing 4.3 percent year on year, official data showed. According to the General Authority for Statistics, residential property prices rose 5.1 percent in the first quarter of the year, while commercial real estate prices increased by 2.5 percent. In contrast, the agricultural sector saw a 1.1 percent decline in property values during the same period. The real estate sector plays a pivotal role in the Kingdom's Vision 2030 strategy to diversify the economy by transforming Saudi Arabia into a regional hub for tourism, business, and living, with authorities introducing a range of policy measures in recent years to boost home ownership and enhance transparency in real estate transactions. 'Data indicates that real estate prices in the residential sector experienced varying increases in the first quarter of 2025 compared to the same quarter of the previous year,' GASTAT said in its quarterly Real Estate Price Index report. Within the residential segment, which holds a 72.7 percent weight in the index, land plot prices, the largest sub-category, increased by 5.3 percent. Villa costs jumped 10.3 percent, apartment prices gained 1.2 percent, and residential floor costs climbed 2.8 percent, the analysis showed. The commercial sector's 2.5 percent annual growth was primarily led by a 2.4 percent increase in land prices, while commercial building prices rose 3.1 percent and shop or gallery prices were up 5.1 percent. Regional trends Regarding the impact of administrative regions on the annual change, the national level recorded an increase of 4.3 percent. 'This was mainly driven by the annual price increase in Riyadh Region by 10.7 percent, followed by Makkah Region at 1.5 percent, while the Eastern Region recorded a decline of 5.5 percent,' the report said. It added: 'At the regional level, Northern Borders, Al-Jouf, and Najran recorded the highest annual increases after Riyadh, at 8.7 percent, 8.2 percent, and 5.6 percent, respectively. Meanwhile, Eastern and Asir Regions recorded the highest rates of decline, at 5.5 percent and 4.4 percent, respectively.' Quarterly comparison Compared to the final quarter of 2024, the overall real estate index was up 0.7 percent in the first quarter. Residential prices increased 1.9 percent over the period, fueled by a 3.2 percent rise in land plot costs. Apartment and residential floor prices edged up 0.2 percent each, while villa costs declined 1.4 percent. In the commercial sector, prices declined by 2.1 percent quarter on quarter, driven by a 2.6 percent drop in commercial land plot prices. 'In contrast, building prices increased by 1.6 percent, and gallery/shop prices rose by 1.8 percent. Similarly, prices in the agricultural real estate sector declined by 3.8 percent, driven by a corresponding 3.8 percent decrease in agricultural land prices,' the report added.
Arabian Business
09-04-2025
- Business
- Arabian Business
Saudi property market booms with $29bn transactions as premium visas drive record foreign investment
Saudi Arabia's real estate market has recorded SAR109 billion (approximately $29 billion) in transactions so far in 2025, with the Premium Residency programme emerging as a significant catalyst for foreign investment in the property sector, industry experts told Arabian Business. The kingdom's push to diversify its economy away from oil has seen a flurry of regulatory reforms aimed at attracting international investors, with the real estate sector emerging as a key beneficiary of these policy shifts. According to data from the Ministry of Justice, cited by Imad Damrah, Managing Director at Colliers in Saudi Arabia, a total of 93,000 real estate transactions have been recorded in the kingdom in the first quarter of 2025. Saudi Arabia's General Authority for Statistic's Real Estate Price Index rose by 3.6 per cent year-on-year in Q4 2024, with commercial and residential segments both seeing strong gains, according to Damrah. This coincides with the continued enforcement of the kingdom's regional HQ mandate, which requires multinational companies to establish their Middle East headquarters in Saudi Arabia or risk losing access to lucrative government contracts. Premium Residency driving luxury market A significant driver of this growth has been the Saudi Premium Residency programme, which by late 2024 had attracted more than 1,200 international investors, according to information from the Minister of Investment shared by Damrah. The programme, which offers various tiers of long-term residency rights, includes a 'Real Estate Owner Residency' category that permits holders to own freehold or usufruct interests in residential property valued at a minimum of SAR4 million (approximately $1.07 million). 'Developers are launching high-end residential offerings with pricing above the minimum price threshold of SAR4 million for premium residency, in anticipation of demand from globally mobile, high-net-worth individuals,' Damrah noted, adding that the programme is already 'shaping buyer demographics, particularly in Riyadh and Jeddah.' Khaled Zowayed, a Partner at law firm Baker Mckenzie, confirmed that the programme offers substantial property rights to foreign investors. 'For Makkah and Madinah, no freehold ownership is permitted even with the residency, but 99-year usufructs are permitted,' he explained. Regulatory changes open holy cities to investment One of the most significant recent policy shifts has been the relaxation of rules governing foreign investment in companies that own real estate in the holy cities of Makkah and Madinah. 'A Royal Decree dated 17/9/1442 (corresponding to 29/04/2021) amended part of the Foreign Ownership of Real Estate Law to specifically exclude listed companies from the definition of Non-Saudi, subject to guidelines to be issued by the Capital Market Authority,' Zowayed said. Following the issuance of these guidelines, foreigners are now permitted to own shares in listed companies that own real estate in Makkah and Madinah, although foreign ownership is restricted to up to 49 per cent of any listed company. Damrah described the sentiment around this policy shift as 'optimistic,' noting that as 'pilgrimage numbers in these cities continue to rise over the long term, this growth creates more opportunities for investment in hospitality and retail development.' Despite the strong growth, the Saudi government is implementing measures to ensure sustainable development in the sector. Damrah noted that authorities are 'taking steps to stabilise growth through land supply expansion, white land taxes and the possibility of implementing lease caps.' These initiatives, he said, 'aim to foster sustainable, long-term growth in the real estate sector while safeguarding consumers from the effects of escalating prices.' Pathways to foreign ownership in Saudi Arabia Zowayed pointed out that there are numerous existing avenues for foreign investment in Saudi real estate, including: Foreign licensed businesses owning their place of business Residents owning their private residences Investment and development of real estate worth at least SAR30 million (land & construction) provided the investment is completed within 5 years Investing in a Capital Market Authority-licensed real estate fund that owns real estate Investing in a Tadawul-listed company that owns real estate Special privilege iqama holders owning property worth at least SAR4 million GCC nationals, who are not considered foreigners under Saudi law, generally being permitted to own real estate, except in Makkah and Madinah Market opportunities and future outlook Both experts highlighted significant opportunities in specific market segments. Damrah pointed to 'strong potential in the mid-income executive housing segment, which remains relatively untapped compared to the abundance of luxury or subsidised affordable housing from government projects.' He also noted similar opportunities in the office market, 'where premium spaces dominate, yet demand from SMEs for quality, cost-effective options continues to grow.' The hospitality sector was identified as particularly promising, especially with upcoming mega-events. 'Hospitality is a promising sector, especially with the upcoming Expo 2030 and World Cup 2034,' Damrah said. He emphasised that a critical strength of the Saudi real estate market is its 'strong organic demand, driven by population growth and shifting demographics,' which adds 'resilience and long-term stability, making the market less susceptible to global volatility.' Mega-events FIFA 2034, Expo 2030 boosting investor confidence Saudi Arabia's securing of major global events has significantly boosted investor confidence in the real estate sector. 'Global visibility is rising with the Kingdom securing major global events such as the FIFA World Cup 2034, Expo 2030 and the Asian Games 2034,' Damrah noted. These events, combined with progress on innovative giga-projects like Qiddiyah and a surge in tourism, are driving demand across multiple real estate sectors, including hospitality, retail, and residential. For investors looking to enter the market, Damrah advised focusing on 'identifying underserved segments such as SME-grade office spaces or mid-income housing and aligning with long-term macro trends shaping the Kingdom's evolving urban landscape.' As Saudi Arabia continues its economic transformation under Vision 2030, the real estate sector appears poised for continued growth, with foreign investment playing an increasingly important role in this development.
Asharq Al-Awsat
31-03-2025
- Business
- Asharq Al-Awsat
Saudi Arabia Implements Real Estate Regulations to Stabilize Riyadh's Market
Amid rapid growth in Saudi Arabia's real estate sector, fueled by the country's economic diversification strategy, Crown Prince Mohammed bin Salman has introduced a series of regulatory measures in Riyadh. These steps aim to balance the capital's real estate market, demonstrating the leadership's commitment to providing sustainable and effective solutions for challenges in this vital sector. Experts told Asharq Al-Awsat that rising property prices remain one of the biggest challenges in the real estate market. According to the General Authority for Statistics (GASTAT), the Real Estate Price Index increased by 3.6% in Q4 2024—the highest quarterly growth in six quarters—mainly driven by the residential sector, which accounts for 72.7% of the index. Several factors are contributing to rising prices, including high demand for housing in major cities, large-scale development projects attracting investment, and improvements in infrastructure that increase property values. Following an in-depth study by the Royal Commission for Riyadh City and the Council of Economic and Development Affairs, the Crown Prince's directives focus on increasing housing supply and regulating market fluctuations to ensure fairness and stability. Key Real Estate Measures The newly announced policies include lifting restrictions on real estate transactions and development in several areas of Riyadh, covering 81.48 square kilometers. To meet housing demand, authorities plan to allocate between 10,000 and 40,000 residential plots annually over the next five years, with a price cap of SAR1,500 per square meter. Priority will be given to married citizens and individuals over 25 who do not own property, with applications processed through a new digital platform developed by the Royal Commission for Riyadh City. To prevent speculative trading, new regulations restrict the sale, leasing, or mortgaging of land for ten years, except for construction financing. If a project is not completed within this period, the land will be reclaimed at its original purchase price. Minister of Municipal, Rural Affairs, and Housing Majid Al-Hogail emphasized that these measures will help balance supply and demand while also revising the White Land Tax program to encourage property development. He also confirmed a comprehensive review of rental regulations, with amendments expected within 90 days. Strong Demand for Real Estate A report by JLL, a global real estate services firm, highlighted that despite a slowdown in construction projects across the Middle East and Africa in 2024, Saudi Arabia remained a strong performer. The Kingdom accounted for SAR29.5 billion in construction contracts, with significant activity in the hospitality, mixed-use, and entertainment sectors. The residential sector also performed well, with SAR7.9 billion in awarded contracts. As Saudi Arabia prepares to host major global events, it may face challenges related to capacity and rising costs between 2025 and 2028. However, the government is addressing these issues by localizing industries, expanding infrastructure investments, accelerating digital transformation, and implementing regulatory reforms, with a focus on renewable energy and sustainability. JLL's Head of Projects and Development Services in Saudi Arabia, Maroun Dib, noted that strategic projects under Vision 2030 will continue attracting massive investments, creating expansion opportunities in the real estate sector. He added that major events like the FIFA World Cup and Expo will drive significant capital inflows, strengthening infrastructure development and setting the real estate sector on a solid growth trajectory beyond 2025. Speaking to Asharq Al-Awsat, Khaled Al-Mobayed, CEO of Manassat Real Estate, stressed the importance of increasing housing supply to meet growing demand. He warned that failing to do so could lead to rising rental prices. Al-Mobayed suggested that expanding real estate development into smaller cities near major urban centers could ease pressure on large cities while providing affordable housing options. Riyadh's hospitality sector is experiencing rapid growth, driven by business tourism and international events. Average hotel room rates rose by 13.3% in 2024 to SAR239 per night, with 2,312 new hotel rooms expected in 2025. In Jeddah, religious and leisure tourism remains strong, supporting long-term growth despite minor market fluctuations. Meanwhile, the retail sector in Riyadh is shifting toward experiential shopping, as consumers seek entertainment-driven retail experiences. Traditional shopping malls—especially enclosed malls—are facing declining occupancy rates. While large malls saw a 1.8% increase in lease rates in Q4 2024, community malls experienced stronger growth at 5.5%, whereas regional malls declined by 9.3%. A similar trend is visible in Jeddah, highlighting the need for more diverse and interactive retail spaces. Industrial and Logistics Sectors on the Rise Rising rental rates in the industrial and logistics sectors in Riyadh and Jeddah indicate strong market demand, fueled by economic diversification and the growth of e-commerce. Additionally, the data center sector is rapidly expanding, driven by 5G technology and artificial intelligence. Riyadh, Dammam, and Jeddah now rank third in the Middle East and Africa for operational co-location data centers, contributing 12.6% of the region's total IT capacity (1,050 megawatts) by the end of 2024. This positions Saudi Arabia for further digital infrastructure expansion.
