Buying real estate in Saudi Arabia?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

The real estate market in Saudi Arabia: 2024 forecast

Last updated on 

buying property foreigner Saudi Arabia

Everything you need to know before buying real estate is included in our Saudi Arabia Property Pack

As we step into the year 2024, the real estate landscape in Saudi Arabia continues to evolve, presenting both challenges and opportunities for investors, homeowners, and industry stakeholders.

In this article, we will give you a clear picture of what's happening in Saudi Arabia's real estate scene for the year ahead.

If you need a full and more detailed report, with fresh data and actionable advice, please note that you can get our pack of documents related to the real estate market in Saudi Arabia. This pack will also give you unlimited access to our team of experts, allowing you to ask them anything related to the housing market in Saudi Arabia.

How's the economy in Saudi Arabia doing?

Current state

Saudi Arabia's economy, buoyed by its oil wealth, has traditionally been strong and stable, contributing to a generally robust real estate market.

Historically, the country's economic stability has been closely tied to the oil industry, with revenues from oil exports significantly influencing the overall economy. This connection has also impacted the real estate market, with periods of high oil prices often leading to increased investment in property development and rising real estate values.

The real estate market in Saudi Arabia, as in many countries, includes both commercial and residential sectors.

Historically, there has been significant investment in commercial real estate, including office buildings, shopping centers, and industrial properties. The residential market, meanwhile, has seen various phases of growth and stagnation, often reflecting broader economic trends.

Regarding housing, the market has faced challenges, particularly in providing affordable housing for the middle and lower-income segments of the population. The Saudi government has recognized these challenges and implemented several policies over the years to stimulate the housing sector and make homeownership more accessible to its citizens.

These policies have included large-scale housing projects, subsidies, and financing initiatives.

More recently, the Saudi government's Vision 2030 initiative, launched in 2016, has had a significant impact on the housing market.

This ambitious plan aims to diversify the Saudi economy away from oil dependency and includes substantial investments in infrastructure and real estate. Key elements of this initiative that affect the housing market include efforts to increase the supply of affordable housing and to encourage private sector participation in the real estate sector.

Notable events in the Saudi real estate market include major infrastructure projects, such as the development of new economic cities, and the opening of the market to greater foreign investment. The government has also introduced regulatory changes to make the property buying and selling process more efficient and transparent.

These changes include streamlined procedures for property registration and dispute resolution, as well as the introduction of digital platforms for real estate transactions.

Saudi Arabia has become an attractive destination for real estate investment, both for domestic and foreign investors. The country's economic stability, large-scale development projects, and regulatory reforms have enhanced its appeal.

Popular areas for investment include major cities such as Riyadh, Jeddah, and the planned mega-city NEOM. These areas often see high demand for both commercial and luxury residential properties.

For foreign investors, there are specific incentives and drawbacks to consider. Incentives include the potential for high returns on investment due to the country's economic growth and the government's push to attract foreign capital. Drawbacks may include regulatory challenges and the need to navigate a different legal and business environment.

In comparison to neighboring countries, real estate prices in Saudi Arabia can vary significantly. Prices are often higher in major cities and in areas targeted for development under Vision 2030. The legal framework for real estate investment in Saudi Arabia is evolving, with efforts being made to increase transparency and stability.

However, it is still advisable for investors to conduct thorough due diligence and possibly seek local expertise when navigating this market.

Outlook and forecast

Saudi Arabia's real estate market has unique factors that distinguish it from others.

One significant factor is the influence of the government and its Vision 2030 initiative, which aims to diversify the economy and reduce oil dependency. This has led to substantial investments in infrastructure and new city projects like NEOM, which are directly impacting the real estate landscape.

Another unique aspect is the country's strong religious and cultural significance, particularly in cities like Mecca and Medina, which attracts religious tourism and influences the market dynamics in these areas.

Forecasting the country's economy and stability, and by extension its real estate market, depends largely on global oil prices, government policies, and the progress of Vision 2030. If current trends continue, the forecast appears positive. Saudi Arabia's economy has shown resilience and the diversification efforts are gradually reducing the overreliance on oil.

This diversification, alongside the push for technological and renewable energy advancements, suggests a positive outlook.

In terms of regional growth, cities like Riyadh, Jeddah, and the planned city of NEOM are experiencing rapid development. Riyadh, as the capital, continues to attract significant investments in commercial and residential projects.

NEOM, being a centerpiece of Vision 2030, represents a futuristic vision of urban development and is expected to see exponential growth.

Comparing Saudi Arabia's economic forecast to its regional neighbors, the country stands out due to its ambitious Vision 2030 goals and significant government investment in infrastructure and technology. This positions it differently from other oil-dependent economies in the region that may not have as diversified or ambitious development plans.

Regarding anticipated changes in government policies in 2024, while specific policy changes are not always predictable, the current trajectory suggests continued support for real estate development and investment.

This could include further easing of regulations for foreign investors, additional initiatives to boost the housing market, and continued investment in mega-projects.

Specific facts suggesting improvements include the ongoing construction of NEOM, expansion of the entertainment and tourism sector, and advancements in the renewable energy sector.

These developments indicate an economy that is diversifying and modernizing, which typically leads to a more dynamic and resilient real estate market.

However, potential risks should not be overlooked. These include geopolitical tensions in the region, fluctuations in oil prices, and the challenges of implementing the ambitious Vision 2030 reforms. A significant downturn in global oil prices, for instance, could impact government spending and economic growth, which in turn could slow the real estate market.

In the event of such risks materializing, the real estate market could experience reduced investment, slower growth in property values, and possibly a tightening of credit conditions.

This could particularly affect high-end and speculative real estate projects, which are often more sensitive to economic fluctuations.

Investors considering the Saudi real estate market should therefore keep a close eye on both the progress of Vision 2030 and the broader economic indicators, as these will play a crucial role in shaping the market's future trajectory.

Get to know the market before you buy a property in Saudi Arabia

Better information leads to better decisions. Get all the data you need before investing a large amount of money. Download our guide.

real estate market Saudi Arabia

What about housing prices in Saudi Arabia?

If you want to know the last prices, rents and yields in Saudi Arabia, we have prepared everything you need in our property pack for Saudi Arabia.

Current state

The trend in real estate prices in Saudi Arabia over the past few years has been influenced by a combination of economic factors and government policies.

In general, there has been a noticeable increase in prices, although this trend varies by region and property type.

Historically, real estate prices in Saudi Arabia have shown sensitivity to economic cycles, particularly those influenced by oil prices.

During periods of high oil prices, the influx of wealth into the economy often leads to increased investment in real estate, driving up prices. Conversely, during economic downturns, such as the 2008 global financial crisis or periods of low oil prices, the real estate market has typically seen a slowdown, with prices either stabilizing or declining.

Comparing current real estate prices to those a decade ago, there's been an overall increase.

This rise is partly due to the economic growth of the country, driven by high oil prices in certain periods, and the government's focus on economic diversification and infrastructure development. Prices are currently showing a trend towards stabilization, with some areas experiencing growth due to specific local factors.

Regions experiencing the highest growth in real estate prices include major cities and areas targeted by government initiatives.

Riyadh, Jeddah, and the Eastern Province, with their economic and commercial significance, have seen significant growth. The planned mega-city NEOM is a special case, as it represents a future-focused development with high expectations for growth, attracting significant investment even in its early stages.

The difference in real estate prices between urban and rural areas in Saudi Arabia is significant.

Urban areas, especially those undergoing development or modernization, command much higher prices due to the demand for housing and commercial space, and the presence of amenities and infrastructure. Rural areas, while less expensive, have seen less demand and investment, which is reflected in their relatively lower real estate prices.

Several specific factors are driving these trends. In urban areas, government projects like Vision 2030, which include economic cities and infrastructure developments, are creating new business and employment opportunities, thus increasing demand for real estate. Additionally, the government's efforts to open up the market to foreign investors and improve the ease of doing business are attracting more investment into these areas.

In contrast, rural areas, which are less affected by these developments, have not seen the same level of investment or demand.

Outlook and forecast

Several economic and demographic factors are currently influencing real estate prices in Saudi Arabia.

One key factor is the country's population growth, particularly in urban areas. As the population increases, especially with a young demographic profile, there is a corresponding rise in demand for housing. This demand drives up real estate prices, particularly in cities where job opportunities and amenities are concentrated.

Another influential factor is the economic diversification efforts under Vision 2030. This initiative is leading to the development of new economic sectors, which in turn creates jobs and attracts both domestic and foreign workers.

The influx of people into areas where these new industries are located boosts demand for housing, thereby increasing real estate prices in those regions.

Specifically, the development of mega-projects like NEOM and the Red Sea Project, aimed at boosting tourism and technology sectors, are expected to lead to an increase in housing prices in their respective regions. These projects are creating new urban centers that require significant housing and infrastructure, thus driving up real estate values in and around these areas.

However, this increase in housing prices may not be uniform across all regions of Saudi Arabia.

Areas that are not directly benefiting from these economic development initiatives may not see the same level of price growth. For example, rural areas or cities not involved in major projects under Vision 2030 may experience more stable or slower-growing real estate prices.

On the contrary, there are factors that could lead to a decrease in housing prices in Saudi Arabia.

One significant factor is the global oil market. As the Saudi economy is still closely tied to oil, a substantial decline in oil prices could lead to reduced government spending and economic slowdown, which in turn could impact the real estate market negatively.

Another potential factor is geopolitical instability in the region. Any escalation in regional tensions could affect investor confidence and economic growth, possibly leading to a decrease in real estate prices.

Additionally, if the ambitious projects under Vision 2030 face delays or fail to meet expectations, this could also lead to a cooling of the real estate market.

Just as with potential increases, decreases in housing prices are likely to be unevenly distributed across the country.

Regions heavily reliant on oil or those lacking in diversified economic activities might be more susceptible to price decreases, while areas benefiting from diversified economic development and government investment might be more insulated.

Get fresh and reliable information about the market in Saudi Arabia

Don't base significant investment decisions on outdated data. Get updated and accurate information with our guide.

buying property foreigner Saudi Arabia

How's the demand for the real estate market in Saudi Arabia?

Current state

The current demand for residential real estate in Saudi Arabia is robust, primarily driven by a young and growing population, as well as economic diversification efforts.

The demand is particularly strong in urban areas and regions where new economic and infrastructure projects are underway. As a result, there tends to be more buyers than sellers in these high-demand areas, reflecting a market that is quite active and competitive.

When it comes to the supply of new housing, the Saudi government has been proactive in addressing the need for more residential properties, especially affordable housing.

This is part of the broader Vision 2030 initiative, which includes goals to increase home ownership among Saudi citizens. Despite these efforts, there is still a gap in some regions between the demand for housing and the supply, particularly in rapidly developing urban centers.

Buyers in the Saudi real estate market are looking for a range of properties, but there is a noticeable trend towards modern, amenity-rich housing in urban areas.

Younger buyers and professionals often seek properties that offer a blend of comfort, convenience, and connectivity. This includes apartments in well-serviced areas and gated communities that offer security and lifestyle amenities. There is also a demand for larger family homes, reflecting the cultural importance of family in Saudi society.

The current interest rates for mortgages in Saudi Arabia have a significant impact on the buying power and demand of consumers.

Historically, Saudi Arabia has had relatively low mortgage rates, partly due to government policies aimed at encouraging home ownership. Lower interest rates make mortgages more affordable, thereby enabling more people to purchase homes and stimulating demand in the real estate market.

Recent government policies and regulations have had a notable impact on the real estate market.

For example, the Saudi government has introduced various subsidies and financing programs to make home ownership more accessible. These include subsidized mortgage loans and programs aimed at specific groups, such as first-time homebuyers.

Additionally, there have been efforts to streamline the property buying process and improve transparency, making it easier and more attractive to purchase real estate in Saudi Arabia.

Zoning laws and regulations have also evolved, with the government often using them as a tool to guide development in line with broader economic goals.

These changes in zoning can impact where and how housing developments are built, influencing both the supply and the types of properties available.

Outlook and forecast

In Saudi Arabia, demographic shifts such as urbanization are significantly influencing the demand in the real estate market.

With a large portion of the population being young and increasingly gravitating towards urban centers for employment and lifestyle reasons, there's a growing demand for housing in cities. Urbanization is leading to a greater need for residential properties in urban areas, particularly apartments and smaller housing units that are suitable for single professionals or smaller families.

Current trends in household formation also play a crucial role. There's an increasing trend of nuclear families, as opposed to the traditional large, extended families.

This shift influences the demand for certain types of properties - smaller, more manageable homes are becoming more popular than larger, traditional family homes. The demand for apartments and townhouses is on the rise, reflecting this change in family structure.

Regarding real estate as an investment, there's a growing interest, partly fueled by the government's efforts to open up the market. People are looking to invest in properties that are likely to appreciate in value, such as those in developing urban areas or near major infrastructure projects.

There's also interest in properties that can generate rental income, given the growing population and urbanization.

Cultural trends also influence the housing market. For instance, there's a growing awareness and preference for modern living spaces that offer amenities and a certain lifestyle. This trend favors properties in well-planned, amenity-rich neighborhoods, often in gated communities.

These properties are seen as offering a higher quality of life and are in demand among the younger, more affluent sections of the population.

In terms of investment versus living purposes, there seems to be a balance. While many people buy properties to live in, there's also a significant segment of the market that purchases real estate as an investment, either to generate rental income or for capital appreciation.

Foreign investment plays a notable role in the Saudi real estate market. It often creates demand for specific types of properties, particularly high-end, luxury properties, and commercial real estate. The government has introduced several measures to encourage foreign investment, including easing ownership and visa regulations.

These measures are designed to boost demand and make the market more attractive to international investors.

As for restrictions and encouragements for foreign investors, while there have been significant moves to open up the market, some restrictions still exist, particularly concerning ownership of properties in certain areas.

The encouragement of foreign investment is generally seen as a positive factor, boosting demand and contributing to the development of the real estate market.

Finally, there are niche markets within Saudi Arabia experiencing unique trends. The luxury property market is one such niche, with high demand for exclusive properties in prime locations. There's also a growing interest in eco-friendly and sustainable homes, reflecting a global trend towards environmental consciousness.

These niche markets cater to specific segments of the population and are influenced by both global trends and local preferences.

Get fresh and reliable information about the market in Saudi Arabia

Don't base significant investment decisions on outdated data. Get updated and accurate information with our guide.

buying property foreigner Saudi Arabia

How's the rental market in Saudi Arabia?

Current state

The demand for rental properties in Saudi Arabia is shaped by various factors including location, property type, and tenant demographics.

In urban areas, apartments and shared accommodations are often in high demand due to their affordability and convenience for young professionals and students. These areas, bustling with economic activities, attract a younger demographic who prioritize proximity to workplaces, educational institutions, and social amenities.

Consequently, rental properties that offer modern amenities such as high-speed internet, fitness centers, and communal spaces are particularly attractive.

Moving to the suburbs, the demand shifts towards single-family homes, catering to families and individuals seeking more space and a quieter environment.

Tenants here often value properties with additional rooms, outdoor spaces, and proximity to schools and family-friendly amenities. Safety and a sense of community are also significant factors influencing rental choices in these areas.

In rural regions, the rental market is generally less dynamic, with a lower turnover of properties. The demand here is often driven by specific local industries or agricultural activities. Tenants in these areas might prioritize practical features like storage space and the durability of the property over modern amenities.

The demographic characteristics of tenants vary significantly across regions. Urban areas see a mix of young singles, couples, and smaller families, typically with higher income levels and employment in sectors like technology, finance, and commerce. In contrast, suburban regions are more likely to house larger families, often with children, and a mix of working professionals and homemakers.

Rural areas might see a more varied demographic, including retirees, agricultural workers, or those employed in local industries.

Income levels and economic factors play a crucial role in the type of properties tenants rent.

Higher-income tenants in urban and suburban areas might opt for luxury apartments or larger homes with premium amenities. On the other hand, lower-income tenants might prioritize affordability and basic amenities, leading to a higher demand for smaller apartments or shared accommodations.

Certain regions in Saudi Arabia may have a high concentration of specific tenant groups. For instance, areas near universities or educational hubs are likely to have a higher concentration of students, while districts known for their commercial activities might attract young professionals.

Retirement communities or areas with relaxed lifestyles might be more appealing to retirees.

Outlook and forecast

The rental market in Saudi Arabia is influenced by a blend of cultural shifts, economic factors, and technological advancements.

A key influencer is the evolving lifestyle and work patterns, especially the rise of remote work. This shift is leading to a change in rental preferences, with more people looking for homes that can accommodate a home office or are located in quieter, less congested areas. As remote work becomes more prevalent, there's less need to live close to city centers, leading to a spread in the demand for rentals across various regions.

Speaking of specific regions, cities like Riyadh and Jeddah remain popular, but there's a growing interest in areas like Neom.

This planned city represents the future of urban living in Saudi Arabia, focusing on innovation and sustainability. Neom and similar urban projects are attracting a young, tech-savvy population, which is shaping rental market trends in these areas.

Technological advancements are also reshaping the rental landscape.

The use of digital platforms for property listings, virtual tours, and online lease agreements is making the rental process more efficient and accessible. This technology-driven approach is particularly appealing to the younger demographic and expatriates, who are comfortable with digital transactions.

Sustainability and green living are increasingly important. There's a growing demand for eco-friendly homes, which offer energy-efficient appliances, solar panels, and green spaces.

This trend is not just limited to niche markets but is becoming a mainstream preference, reflecting a broader awareness of environmental issues among Saudi residents.

Regionally, the rental market forecast varies. In major cities like Riyadh, demand remains high due to economic and commercial activities.

However, in more remote areas or smaller cities, the market is less dynamic. The overall trend, though, indicates a gradual shift towards suburban and emerging urban areas, driven by lifestyle changes and the availability of more affordable options outside city centers.

The long-term outlook for Saudi Arabia's rental market is one of transformation and growth. With mega-projects like Neom, the country is poised to attract a global workforce, which will fuel demand for rental properties.

The focus on sustainability and technology integration will likely continue, shaping the nature of rental properties that are in demand.

Lastly, niche markets like luxury properties and eco-friendly homes are witnessing unique trends. The luxury market, particularly in cities like Riyadh and Jeddah, caters to high-income residents and expatriates seeking premium amenities.

The eco-friendly segment, although smaller, is growing, driven by increased environmental consciousness and government initiatives promoting sustainability.

Thinking of buying real estate in Saudi Arabia?

Acquiring property in a different country is a complex task. Don't fall into common traps – grab our guide and make better decisions.

buying property foreigner Saudi Arabia

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.