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What will happen in Saudi Arabia’s real estate market? Will prices go up or down? Is Riyadh still a hotspot for foreign investors? How is Saudi Arabia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who buy properties in Saudi Arabia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Saudi Arabia’s home prices will keep rising because of strong economic growth and urbanization
Saudi Arabia's residential property prices are climbing, and this trend is set to continue.
Thanks to strong economic growth, more people are finding themselves with the means to invest in property. The country's GDP is on a steady rise, and this economic boost is fueling the housing market. As cities like Riyadh and Jeddah expand, the demand for homes is naturally increasing, pushing prices up.
Urbanization is a big player here. With 82.1% of the population already living in urban areas as of 2023, and projections showing this could hit 97.6% by 2030, the need for housing in these bustling cities is only going to grow. This urban shift is a major reason why property prices are on the rise.
Government initiatives like Vision 2030 are also making waves. These plans aim to diversify the economy and promote sustainable urban development, which includes huge investments in real estate and infrastructure. Projects like NEOM and The Line are not just futuristic ideas; they're drawing in buyers looking for modern, sustainable living spaces.
Then there's the demographic factor. With nearly 60% of the population under 24, there's a young crowd eager to find homes. This youthful demographic is putting pressure on the housing market, driving demand and prices up. The government's push for homeownership through various policies is also playing a part in this upward trend.
All these elements combined suggest that Saudi Arabia's property market is on a solid upward trajectory, making it an attractive option for potential buyers. Strong economic growth and urbanization are the key forces behind this trend.
Sources: Arab News, UN Habitat, IR Global, Design Space
2) Demand for short-term rentals in Makkah will rise due to religious tourism
The demand for short-term rental properties in Makkah is soaring due to the influx of religious tourists.
In 2023, Makkah welcomed 17.5 million religious tourists, and this number is set to climb to between 25 and 30 million by 2025. This surge is not just a statistic; it's a lifeline for the local economy, fueling everything from hospitality to retail. Imagine the bustling streets filled with pilgrims, each contributing to the vibrant tapestry of the city.
The growth in Umrah and Hajj pilgrims is a key driver of this trend. During the 1445H Hajj season, 1,833,164 pilgrims participated, with most arriving from outside Saudi Arabia. This influx is a testament to Makkah's global religious significance. The Hajj tourism industry is on a promising trajectory, expected to grow at a compound annual growth rate of 7.20% through 2034, reaching a staggering value of US$ 343.55 billion.
Platforms like Airbnb are becoming household names in Makkah, with 514 active listings as of September 2024. These properties boast a median occupancy rate of 41% and are typically booked for 150 nights a year. This isn't just a trend; it's a reflection of the strong demand for alternative accommodations, especially during peak pilgrimage seasons when hotel occupancy rates skyrocket.
For those considering investing in Makkah's property market, the numbers speak volumes. The city's unique position as a religious hub ensures a steady stream of visitors year-round. This constant demand makes short-term rentals a lucrative opportunity, offering both cultural enrichment and financial gain.
As Makkah continues to attract millions of pilgrims annually, the need for diverse accommodation options will only grow. This trend is particularly notable as it highlights the city's evolving landscape, where tradition meets modernity, and where every visitor finds a place to stay.
Sources: Arab News, Future Market Insights, Airbtics, Saudi Visa Office, Saudi Statistics
We have made this infographic to give you a quick and clear snapshot of the property market in Saudi Arabia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) More foreign investors will enter Saudi Arabia’s real estate market due to new long-term residency visas
The introduction of long-term residency visas in Saudi Arabia is a game-changer for foreign investors eyeing the real estate market.
In 2023, Saudi Arabia's Foreign Direct Investment (FDI) stock saw a 13.4% increase, reaching 897 billion SAR, with a net inflow of 86 billion SAR. This surge is closely tied to the new residency visa program, making the country a more attractive destination for foreign investors.
With the expansion of the Premium Residency Permit (PRP) scheme in January 2024, five new categories have been added, broadening the eligibility criteria for long-term residency. This change simplifies the application process for foreign nationals, drawing in more investors interested in the stability and benefits of long-term residency.
The Saudi real estate market is booming, with a noticeable uptick in transactions involving foreign buyers. The requirement for foreign buyers to invest SAR 4 million ($1.07 million) in real estate to secure a residency visa is driving high-value transactions and boosting demand for luxury properties.
This has led to a transformation in the urban landscape of major cities like Riyadh, Jeddah, and Dammam. Developers are expanding their portfolios to include more premium residential projects, reshaping these cities.
Sources: Fragomen, AGBI, S&P Global, Arab News
4) Regulatory changes will boost affordable housing development, closing the demand-supply gap
Regulatory changes in Saudi Arabia are making it easier for developers to build affordable housing, addressing the demand-supply gap.
The Saudi government is actively supporting this shift by allocating over SAR 300 billion to the 'Vision 2030' housing initiative. This initiative is a game-changer, offering incentives for developers to focus on affordable housing solutions. It's a big leap forward in making housing more accessible.
One standout change is the streamlined licensing process through programs like Etmam. This program cuts through red tape, making it quicker for developers to get building approvals. Plus, the White Land program is shaking things up by imposing fees on vacant urban land, nudging landowners to either develop or sell, which boosts the supply of residential land.
Financing options are also getting a boost. The Saudi Real Estate Refinance Company is pouring funds into the market, with plans to refinance a large chunk of the residential mortgage market by 2025. Programs like Sakani are stepping in with mortgage loans and free land parcels, aiming to increase homeownership rates.
These changes are not just about building more homes; they're about making homeownership a reality for more people. The government's proactive approach is setting the stage for a more balanced housing market, where supply meets demand more effectively.
Sources: Global Business Outlook, MDPI, Vision 2030
5) Rental yields in Jeddah will dip slightly as new developments boost rental unit supply
Jeddah is buzzing with new residential developments popping up everywhere.
In 2023, the National Housing Company in Saudi Arabia launched 757 new residential units in Jeddah, featuring a mix of villas, townhouses, and apartments. Fast forward to 2024, and the city saw 11,300 new units delivered just in the first half of the year. This boom in construction is reshaping the city's skyline and housing market.
With all these new properties, Jeddah's rental market is feeling the heat. The supply of rental units is starting to outpace demand, a typical scenario in fast-growing cities. While we don't have exact vacancy numbers for Jeddah, we can look at Riyadh, where occupancy rates dropped by 4.4 percentage points in early 2024, hinting at a similar trend.
Tenants are now leaning towards newer properties, drawn by their modern amenities and better living conditions. This shift means older rentals are losing their charm, leading to lower demand and, consequently, lower rental yields. We've seen this pattern in places like Dubai and Abu Dhabi, where more supply often means lower rental yields.
As Jeddah continues to grow, the influx of new developments is likely to keep rental yields on a downward trend. The city's real estate landscape is changing, and those looking to invest should keep an eye on how these dynamics play out.
Sources: Saudi Boom, Arab News, CBRE Saudi Arabia
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6) Jeddah’s property prices will level out as new developments increase supply
Jeddah's real estate market is buzzing with new developments.
Take the Jeddah Central project, for example, which plans to deliver over 17,000 housing units and 2,700 hotel rooms by 2027. This is just one of the many projects reshaping the city. Another big player is Murooj Jeddah, aiming to build 210 towers, significantly boosting the housing supply. These projects are part of a broader trend that's transforming Jeddah's skyline.
The Saudi government's Vision 2030 is a game-changer, pushing for urban development and mega-projects. This initiative is not just about building; it's about creating demand for modern living spaces. With more homes and commercial spaces popping up, property prices are expected to stabilize as supply meets demand.
Jeddah is in the Western Province, an area undergoing a massive transformation. There are over 100 projects valued at $613 billion in the works here. This surge in housing inventory is crucial for balancing the market. As these projects wrap up, buyers and renters will have more choices, which should help keep prices in check.
For those eyeing property in Jeddah, this means more options and potentially better deals. The influx of new developments is set to provide a variety of choices, from luxury apartments to affordable housing. As the market adjusts to this new supply, property prices are likely to find a stable footing.
Sources: Construction Briefing, Jeddah Construct
7) Rental yields in Makkah will rise as demand for short-term stays increases
Makkah is experiencing a surge in demand for short-term accommodations due to a growing number of pilgrims visiting for Hajj and Umrah.
In 2023, during Ramadan, hotel occupancy rates in Makkah hit 80%, the highest in three years. This spike shows how much people need places to stay during peak religious times. The Saudi government is also pushing religious tourism, which means more pilgrims and a steady need for accommodations.
Land for new developments in Makkah is scarce, so existing properties, especially short-term rentals, are in high demand. This limited space is driving up rental yields. When peak seasons roll around, the prices of residential properties climb, showing a strong market for short-term rentals.
For those considering buying property in Makkah, it's worth noting that the city's unique position as a religious hub ensures a constant flow of visitors. This steady influx means that investing in short-term rental properties could be a lucrative opportunity.
With the ongoing development of infrastructure and public transport, accessibility to key areas in Makkah is improving, making it even more attractive for visitors. This improvement is likely to further boost the demand for short-term accommodations.
As Makkah continues to evolve, the potential for increased rental yields remains strong, driven by both the scarcity of land and the ever-growing number of pilgrims.
Sources: Zawya, Sotheby's Realty, Airbtics, Saudi Gazette
8) Riyadh’s property prices will rise moderately as the city expands and modernizes
Riyadh's real estate market is on the rise as the city expands and modernizes.
With the population expected to jump from 7 million in 2022 to 9.6 million by 2030, Riyadh is gearing up for a housing boom. This means a need for 305,000 more homes for Saudi nationals between 2024 and 2034. The city's growth is not just about numbers; it's about creating vibrant communities and modern living spaces.
The Saudi government's Vision 2030 is a game-changer, driving economic diversification and urban development. This initiative is making Riyadh's real estate market more appealing. Projects like NEOM and the Red Sea Project are turning heads, boosting the allure of nearby areas and pushing property values up.
As more people flock to Riyadh, the demand for housing is set to stay high. This urbanization trend is a key factor in rising property prices. In fact, residential transaction values in Saudi Arabia shot up by 25% year on year in the third quarter of 2024, reaching SR35.4 billion ($9.43 billion).
For those considering buying property in Riyadh, it's worth noting that the city's growth is backed by substantial infrastructure investments. These developments are not just about building; they're about enhancing the quality of life and creating a sustainable urban environment. Riyadh is becoming a hub of opportunity, with a real estate market that's poised for steady growth.
Investing in Riyadh's real estate now could mean tapping into a market that's set to thrive. With the city's ongoing expansion and modernization, property values are likely to see moderate increases. Riyadh is not just expanding; it's evolving, offering a promising landscape for potential buyers.
Sources: Arab News, JLL MENA, Arab News
We made this infographic to show you how property prices in Saudi Arabia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) Demand for retirement-friendly communities and accessible housing will grow as the population ages
In Saudi Arabia, life expectancy has jumped from 62 years in the 1980s to 78 years by 2022.
This means more people are living longer, and the number of those aged 60 and above is set to rise. By 2035, the elderly population could grow from 1.1 million to 3.58 million, and by 2050, they might make up a quarter of the population.
With this shift, there's a growing need for homes and communities that cater to older adults. Government reports emphasize the demand for senior-friendly housing and amenities that support aging individuals.
Interestingly, a survey by Knight Frank found that many Saudi households are already thinking about the support they’ll need as they age, including physical, mental, and social aspects.
For those considering property investment, this trend suggests a promising opportunity in developing retirement-friendly communities. Investing in accessible housing options could meet the rising demand and offer a stable market.
As the population ages, the focus on creating environments that support a healthy, active lifestyle for seniors will likely grow. This shift opens doors for innovative housing solutions that cater to the needs of an older demographic.
Sources: SAMA, Consultancy ME, Urban Living News
10) Demand for homes in major cities will rise as urbanization attracts more people
Urbanization in Saudi Arabia is on the rise, with the urban population growing at 3.5893% in 2023.
By 2030, it's expected that urbanization could reach up to 97.6%, especially in cities like Riyadh, which might see its population hit 8.2 million people. The government is pushing this growth with initiatives like the Future Saudi Cities Program, aiming to make cities more economically productive and livable.
These efforts are not just about numbers; they’re about making urban areas more attractive. The program focuses on improving urban legislation and creating environments where people want to live and work. This is part of a broader strategy to draw more people into urban areas.
Infrastructure is a big part of this urban push. The Kingdom is investing heavily in new cities and expanding public transportation in major hubs like Riyadh and Jeddah. These developments make city life more convenient, encouraging more people to move to urban areas.
With these changes, urban living becomes not just a necessity but a choice for many. The convenience of public transport and the promise of a vibrant city life are strong pulls for those considering a move.
As urbanization continues, the demand for residential properties in these bustling cities is likely to increase, making it an exciting time for potential property buyers.
Sources: Trading Economics, UN Saudi Arabia, UN Habitat, Urban Agenda Platform
11) Demand for mixed-use developments in Dammam will grow as urban living trends change
Dammam's urban population is on the rise, and it's changing the city's landscape.
Back in 2019, Dammam had around 1.9 million residents, and by 2040, this number is expected to jump to 3.05 million. This surge means more people will need places to live, work, and relax, which is why mixed-use developments are becoming so popular. These spaces offer everything in one spot, making life more convenient.
The Saudi government is also playing a big role by investing heavily in infrastructure and public transport. This isn't just about getting around more easily; it's about improving life quality and cutting down on carbon emissions. With better public transport, urban living becomes more appealing, and mixed-use developments are right at the heart of this trend.
There's a noticeable shift among Saudis towards sustainable and integrated living spaces. According to a report by Knight Frank, 67% of Saudis are interested in mixed-use developments. They love the convenience and community vibe these places offer. This is especially true for millennials, who are all about eco-friendly living, pushing the demand for these developments even higher.
As urban living trends evolve, Dammam is set to see a rise in demand for mixed-use developments. The city's growth, combined with government initiatives and changing preferences, is creating a perfect storm for these all-in-one spaces. Millennials, in particular, are driving this change, seeking out places that align with their values and lifestyle.
Sources: World Bank, KSA.com, Arab News
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12) Foreign buyers will target luxury properties in Riyadh and Jeddah for high-end investments
Foreign buyers are zeroing in on luxury properties in Riyadh and Jeddah for high-end investments.
The Saudi luxury real estate market is thriving, with its value expected to grow from USD 13.75 billion in 2023 to USD 15.76 billion by 2029. This steady growth is a magnet for those looking to invest in upscale properties. The appeal is not just in the numbers; it's in the lifestyle and prestige these cities offer.
Since the launch of Vision 2030, international investment in Saudi real estate has jumped by over 50%. This is thanks to eased regulations on foreign ownership, making it simpler for global investors to dive in. Vision 2030 is not just a plan; it's a transformation, with $1 trillion in infrastructure projects reshaping the landscape.
Riyadh and Jeddah are buzzing with a growing expatriate community, fueling the demand for luxury homes. In Riyadh alone, there was a 51.6% increase in sales transactions in the year leading up to Q2 2024, totaling 18,500 transactions worth around SAR 26.6 billion. This surge is a clear sign of the city's allure.
Average villa prices in these cities have climbed by more than 5% in the 12 months leading up to Q3 2024. This rise in prices reflects the strong demand and limited supply of luxury properties, making it a seller's market.
For those eyeing high-end investments, the focus is on Riyadh and Jeddah, where the blend of modernity and tradition creates a unique real estate landscape. The combination of economic growth, regulatory changes, and a vibrant expatriate community makes these cities prime targets for luxury property investments.
Sources: Mordor Intelligence, Global Business Outlook, Kanebridge News, Design Space
13) Stricter environmental rules will boost the development of sustainable housing projects
Saudi Arabia is making big moves towards environmental sustainability with initiatives like the Saudi Green Initiative and the Green Middle East initiative.
By 2024, Saudi Arabia had already registered 2,000 of the 5,000 green building projects across the Arab world. This boom in sustainable construction is evident as the green building market is expected to grow from $16.4 billion to $33.0 billion by 2030, with a compounded annual growth rate of 12.3 percent.
Saudi Arabia has launched over 85 initiatives under the Saudi Green Initiative, focusing on energy efficiency and emission reduction. These efforts are paving the way for significant investments in renewable energy projects, crucial for sustainable residential development.
New green building codes and regulations are making eco-friendly building materials more available. This ensures that new constructions meet sustainability standards, further boosting the development of eco-friendly housing.
For those considering buying property in Saudi Arabia, these initiatives mean more sustainable and energy-efficient homes. The focus on green building is not just a trend but a commitment to a greener future.
With the government's push for sustainability, expect to see more residential projects that align with these green standards. This shift is driven by the introduction of stricter environmental regulations, ensuring that new developments are both eco-friendly and efficient.
Sources: Arab News, Saudi Green Initiative, Ministry of Environment, Water and Agriculture
14) High-rise apartments will become more popular in cities due to limited land availability driving vertical growth
Saudi Arabia's urban population is booming, with nearly 34 million people expected by 2024.
This surge is driving up housing demand in cities like Riyadh and Jeddah, where land prices are climbing steadily. In Riyadh, for example, residential unit prices have jumped by about 10% year-on-year, making it more sensible for developers to build upwards rather than outwards.
The Saudi government is on board with this shift, actively promoting urban development through initiatives like the Future Saudi Cities Program. This program aims to create sustainable and economically productive cities, naturally supporting the trend towards vertical development.
As land becomes scarcer, especially in fast-growing cities like Riyadh, the real estate market is feeling the squeeze. The youth population, a significant part of the country, is also driving demand for modern, convenient living spaces, further boosting the popularity of high-rise apartments.
In bustling urban centers, high-rise apartments are becoming the go-to choice for many, as land scarcity drives vertical development. This trend is not just about space; it's about meeting the lifestyle needs of a younger, more dynamic population.
With the government's backing and the market's natural evolution, high-rise living is set to become a staple in Saudi Arabia's urban landscape.
Sources: Mordor Intelligence, UN Habitat, UN Saudi Arabia, S&P Global Ratings
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Saudi Arabia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
15) Demand for affordable housing in Saudi Arabia will grow as more young people enter the market
Young Saudis aged 15-34 make up 36.7% of the population, and they're diving into the housing market.
With more people flocking to cities, urbanization is set to hit 97.6% by 2030, making city living a hot choice for the youth. This shift is pushing up the demand for homes in urban areas, where young folks want to be.
Thanks to Vision 2030, the government is all in on boosting homeownership, aiming for a 70% homeownership rate by 2030. Programs like Sakani and the Real Estate Development Fund are stepping up, offering financial help to make buying a home more doable for young Saudis.
Young buyers are leaning towards smaller, budget-friendly homes, a trend backed by consumer behavior studies. Economic hurdles are nudging the youth towards affordable housing, as traditional homes often come with a hefty price tag.
These shifts are not just about numbers; they're about lifestyle changes. Young Saudis are looking for homes that fit their modern, urban lifestyles, and the market is responding. Affordable housing is becoming a key focus as the youth drive this demand.
Sources: Saudi Statistics, UN Habitat, S&P Global
16) Buyers will keep choosing gated communities for their security and amenities
Gated communities in Saudi Arabia are becoming increasingly popular due to a rising demand for secure living environments.
Even though crime rates are generally low, the need for security is a significant concern, especially during large events like Hajj and Umrah, where incidents of petty crime have been reported. People are drawn to gated communities for the added sense of safety they provide.
In major cities like Riyadh, the population is expected to grow significantly, potentially reaching 17 million by 2030. This growth has led to the development of new real estate projects, including gated communities that offer not just security but also a range of amenities like parks and pools.
Consumer surveys highlight a strong preference for community amenities, which are a key feature of gated communities. Developments such as King Salman Park, with its extensive landscaping and numerous residential units, are highly sought after, making these communities an attractive option for buyers.
Government policies, like the Sakani initiative and the Real Estate Development Fund, support the real estate sector by providing interest-free mortgages and mortgage guarantees. These policies encourage developers to focus on creating secure and amenity-rich environments, further boosting the appeal of gated communities.
With the combination of security, amenities, and supportive government policies, gated communities are set to continue attracting buyers who seek a secure and comfortable lifestyle.
Sources: Knight Frank, Wikipedia, S&P Global
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.