\n\tRIYADH: The fundamentals underpinning Saudi Arabia\u2019s housing market \u201ctranscend\u201d the impact of the Iran war, a property expert has said after residential transaction volumes fell 50 percent year on year in the first quarter of 2026.<\/p>\n
\n\tUncertainty caused by the conflict, which began on Feb. 28, was cited as one of the factors behind the decline, along with affordability pressures and weaker mortgage activity.<\/p>\n
\n\tDespite the softer market activity, Knight Frank said underlying housing demand remains robust, supported by population growth, rising homeownership rates and ongoing government housing initiatives.<\/p>\n
\n\tSaudi Arabia\u2019s property sector remains a central pillar of Vision 2030 as the Kingdom works to diversify its economy and position itself as a global tourism, investment and business hub.\u00a0<\/p>\n
\n\t\u201cThe long-term demand fundamentals underpinning the Kingdom\u2019s housing market transcend the ongoing regional conflict,\u201d Faisal Durrani, partner and head of research for the Middle East and North Africa at Knight Frank, told Arab News.<\/p>\n
\n\t\u201cWe forecast the need for 830,000 homes nationwide by 2034 when factoring for the growing Saudi-national population alone.\u201d<\/p>\n
\n\tThe Real Estate General Authority expects the Kingdom\u2019s property market to reach $101.62 billion by 2029, with a compound annual growth rate of 8 percent from 2024.<\/p>\n
\n\tEarlier this year, Saudi Arabia introduced a new framework allowing non-resident foreign ownership of real estate, one of the most significant liberalizations of the market to date.\u00a0<\/p>\n
\n\tKnight Frank said the reforms are expected to strengthen investor confidence, improve transparency and support long-term demand across both residential and commercial real estate.<\/p>\n
\n\tDurrani said addressing affordability challenges will be key to unlocking demand from both domestic and international buyers.<\/p>\n
\n\t\u201cThe key moving forward to unlocking the pent-up housing demand from domestic and international buyers will be to address the imbalance between buyer budgets and planned housing stock,\u201d he told Arab News.<\/p>\n
\n\t\u201cThis is where we see the biggest market gap today.\u201d<\/p>\n
\n\tKnight Frank\u2019s analysis found that residential transaction volumes fell to 29,493 deals during the first three months of the year, while transaction values declined 57 percent year on year to SR22 billion ($5.86 billion).<\/p>\n
\n\tThe slowdown was most pronounced in Riyadh, where transaction volumes and values dropped 82 percent compared with the same period last year. Jeddah, the Dammam Metropolitan Area, Makkah and Madinah also recorded weaker activity.<\/p>\n
\n\tAccording to Knight Frank, the moderation in transactions reflects growing affordability pressures, particularly in Riyadh, rather than a deterioration in underlying demand.\u00a0<\/p>\n
\n\tThe consultancy noted that regional uncertainty has made some prospective buyers more cautious about making major financial commitments and prompted others to delay purchases in anticipation of potential price adjustments.<\/p>\n
\n\tThe slowdown in transactions coincided with weaker mortgage activity. New residential mortgage contracts declined 25 percent year on year during the first four months of 2026, while the total value of mortgage lending fell 34 percent.<\/p>\n
\n\tDespite weaker sales activity, residential prices continued to rise across most major markets. Apartment values in Riyadh increased 6.3 percent year on year during the first quarter, while villa prices rose 4.9 percent. Apartment values in Jeddah and the Dammam Metropolitan Area climbed 2 percent and 2.3 percent, respectively.<\/p>\n
\n\tKnight Frank said the resilience in prices reflects market conditions during the opening months of the year, before the full impact of regional uncertainty became visible in transaction data.<\/p>\n
\n\tGovernment-backed housing initiatives continue to support the sector\u2019s long-term outlook. Homeownership in Saudi Arabia has risen from 47 percent in 2016 to more than 66 percent in 2025, supported by programs such as Sakani, Tawazon and large-scale developments led by the National Housing Co.<\/p>\n
\n\tThe consultancy highlighted the Tawazon platform as a key initiative aimed at improving affordability by expanding access to serviced residential land in Riyadh, where prices are capped at SR1,500 per sq. meter.<\/p>\n
\n\tSaudi Arabia\u2019s housing supply is also set to expand significantly. Riyadh\u2019s residential stock is forecast to grow from about 2.7 million units in 2025 to more than 3.3 million units by 2030.\u00a0<\/p>\n
\n\tHousing stock in Jeddah is projected to reach 1.47 million units, while supply in the Dammam Metropolitan Area is expected to approach 1 million units over the same period.<\/p>\n
\n\tElsewhere, Saudi Arabia\u2019s office market continued to demonstrate strong fundamentals during the first quarter. Grade A office rents in Riyadh rose 2.5 percent year on year to SR2,770 per sq. meter, while occupancy levels remained high at 97 percent.<\/p>\n
\n\tDemand has been supported by the Kingdom\u2019s Regional Headquarters Program, which has attracted more than 700 multinational companies, exceeding the original Vision 2030 target of 500 firms.<\/p>\n
\n\tForeign investment activity also strengthened during the period, with the number of foreign investment licenses increasing from 4,615 in the first quarter of 2025 to 5,516 in the same period this year.<\/p>\n
\n\tKnight Frank said demand for premium office space remains strong despite uncertainty linked to regional developments. At the same time, rising construction costs, higher freight and fuel prices, and ongoing supply chain disruptions could delay the delivery of new office developments and prolong the shortage of high-quality office space in Riyadh.<\/p>\n","protected":false},"excerpt":{"rendered":"RIYADH: The fundamentals underpinning Saudi Arabia\u2019s housing market \u201ctranscend\u201d the impact of the Iran war, a property expert…\n","protected":false},"author":2,"featured_media":736375,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-736374","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/736374","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=736374"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/736374\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/736375"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=736374"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=736374"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=736374"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}