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What do the latest numbers reveal about Saudi Arabia’s real estate market? Are property prices on the rise, or are they stabilizing? Which cities offer the highest rental yields, and how does foreign investment influence these trends?
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 invest in Saudi Arabia, we’ve gained firsthand insights into these trends. Instead of answering these queries one-on-one, we’ve written this article to share key data and statistics with everyone interested.
Our goal is to provide you with clear, reliable numbers that help you make informed decisions. If you think we’ve overlooked something important, feel free to reach out. Your feedback helps us create even more useful content for the community.
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1) Residential properties in Saudi Arabia offer a 5% to 7% return on investment
The average return on investment for residential properties in Saudi Arabia is between 5% and 7%.
In bustling cities like Riyadh and Jeddah, rental yields hover around 5% to 8%. These cities are magnets for renters, driving up demand and making them prime spots for investors. The high demand in these areas is a key factor in boosting rental yields.
The residential market in Saudi Arabia is on a roll, especially in 2023 and 2024. There's been a surge in new residential units and mortgages, which supports higher rental yields. Government initiatives aimed at increasing home ownership among Saudi citizens are also playing a big role in strengthening the market.
Year-on-year growth in rental yields is evident, with Riyadh and Jeddah seeing increases of 9% and 4%, respectively. This steady growth highlights a robust market that continues to offer solid returns for investors.
Investors are drawn to these cities not just for the current yields but also for the potential for future growth. The government's push for home ownership and the ongoing development of new residential projects are creating a fertile ground for investment.
With these factors in play, the Saudi residential property market is proving to be a lucrative option for those looking to invest. The combination of high demand, government support, and consistent growth makes it an attractive choice.
Sources: S&P Global, Real Estate Asia
2) In Makkah, property prices per square meter exceed SAR 10,000 near the Haram area
The average property price per square meter in Makkah, especially near the Haram area, is higher than SAR 10,000.
Makkah holds a special place as one of the holiest cities in Islam, drawing in millions of pilgrims annually. This constant flow of visitors means there's always a high demand for places to stay, especially close to the Haram area, where the Kaaba is located.
Wealthy investors are particularly interested in snapping up properties near this sacred site, which only pushes demand and prices even higher. The allure of owning property in such a spiritually significant location is a major factor.
Another reason for the high prices is the limited availability of land in this prime area. With so many people wanting a piece of this coveted real estate, the scarcity of land naturally drives up the cost.
For those considering buying property in Makkah, it's important to understand these dynamics. The combination of religious significance, investor interest, and limited land makes this market unique.
So, if you're thinking about investing in Makkah, especially near the Haram, be prepared for premium prices due to these compelling factors.
Source: Al-Marsd
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.
3) About 30% of residential property deals in Saudi Arabia are now financed with Islamic mortgage products
Saudi Arabia is seeing a surge in the use of Islamic mortgage products for buying homes.
This shift is driven by the country's predominantly Muslim population and the government's push for Sharia-compliant financial options. The Real Estate Finance Law mandates that home financing must align with Sharia principles, significantly influencing this trend.
Saudi Arabia's Islamic finance market is on the rise, with Islamic banking assets hitting $544 billion in 2020. This growth is fueled by supportive government policies and stimulus measures, particularly during the pandemic.
Today, about 30% of home purchases in Saudi Arabia are financed through Islamic mortgage products, underscoring the critical role of Islamic finance in the real estate market.
Sources: SAMA Report 2021, Purple Quarter
4) The average household size in Saudi Arabia dropped to 5.2 people in 2024 from 6.5 in 2000
The average household size in Saudi Arabia has dropped to 5.2 people in 2024, down from 6.5 in 2000.
This shift is largely due to a declining fertility rate, as families are choosing to have fewer children than in the past. Improved education and economic opportunities for women are key factors, often leading to delayed marriages and smaller families.
Urbanization is another major influence. In bustling cities like Riyadh, household sizes can differ significantly. Urban areas sometimes see larger households due to unique living arrangements, contrasting with rural settings.
Economic considerations, such as rising housing prices and rental costs, also play a part. These factors can push families toward smaller living spaces, impacting household size.
Overall, these demographic and economic changes are reshaping how people live, contributing to the decrease in average household size over the years.
Sources: World Population Review, World Population Review - Riyadh, Wikipedia - Demographics of Saudi Arabia
5) The median price for a villa in Jeddah is about SAR 1.5 million
In Jeddah, the real estate market has seen some interesting shifts in villa prices over 2023 and 2024.
According to Source 3, the average house price in Jeddah is about SAR 1.5 million, which is often seen as the median price for a residential villa. This figure gives potential buyers a good benchmark when considering a purchase in the city.
However, villa prices can vary widely depending on the neighborhood. For example, in Al Hamra, villas can reach up to SAR 8,000 per square meter, significantly higher than the city average. This variation across neighborhoods is a key factor in the overall median price of SAR 1.5 million.
Source 4 provides additional context, noting that villa prices in Jeddah have been increasing at a compound annual growth rate of 4.4% since 2020. This steady rise over the years has likely played a role in maintaining the current median price level.
While Source 4 doesn't directly mention the median price, it supports the interpretation from Source 3 that the median price is around SAR 1.5 million. This growth trend is something potential buyers should keep in mind.
Sources: Aparthotel.com, Saudi Laws
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6) Villas in Jeddah have a median rental price of about SAR 120,000 per year
The median rental price for villas in Jeddah is around SAR 120,000 per year.
In recent years, villa rental prices in Jeddah have shown a wide range, from SAR 30,000 to SAR 250,000 annually, according to sources like Wasalt and Bayut. This variation reflects a market that caters to different financial capabilities, offering something for everyone.
For those considering a three-bedroom villa in a Western compound, Expatica notes that prices typically range from SAR 120,000 to SAR 200,000 per year. This suggests that SAR 120,000 is a reasonable midpoint, especially when factoring in amenities and location.
Such pricing diversity means that whether you're looking for a budget-friendly option or a more luxurious setting, Jeddah's villa market has you covered. The availability of villas at different price points ensures that potential renters can find a property that suits their needs and preferences.
Moreover, the median price of SAR 120,000 is not just a random figure; it represents a balance between affordability and the quality of living spaces available. This price point is particularly relevant for those seeking a comfortable lifestyle without overspending.
Sources: Wasalt, Expatica, Bayut
7) In Riyadh, the average cost per square meter for homes ranges from SAR 3,000 to SAR 5,000
The average cost per square meter for residential properties in Riyadh is between SAR 3,000 and SAR 5,000.
In neighborhoods like Dar Al-Baida, prices are quite affordable, ranging from SAR 1,900 to SAR 3,250 per square meter. This makes it a great option for those looking for value in Riyadh. Similarly, Al Aziziyah offers competitive pricing, with costs between SAR 2,700 and SAR 4,200 per square meter, aligning with the lower end of the city's average.
On the other hand, if you're eyeing upscale areas like Hittin and Al-Malqa, be prepared for higher prices. These districts have costs ranging from SAR 9,500 to SAR 13,500 per square meter, which is significantly above the average range.
For those seeking more accessible housing options, the SAR 3,000 to SAR 5,000 range is more reflective of mid-to-low-end districts in Riyadh. This makes it easier for potential buyers to find properties that fit their budget without compromising on location.
These pricing trends highlight the diversity in Riyadh's real estate market, where affordable options coexist with luxury offerings. Whether you're looking for a budget-friendly home or a high-end property, the city has something to offer.
Sources: Saudi Laws, Expat Focus, Arab News
8) Luxury residential developments in Riyadh experienced a 9% price increase in 2024
Luxury residential developments in Riyadh saw a price increase of 9% in 2024.
Riyadh is buzzing with activity as professionals and families flock to the city for work, boosting demand for modern housing. This influx has led to a steady climb in property prices, particularly for villas and apartments. The city is transforming, and everyone wants a piece of it.
High-end residential projects are popping up everywhere, adding a fresh stock of modern homes to the market. By the second quarter of 2024, villas in Riyadh averaged SAR 5,824 per square meter, reflecting a 12.2% growth since early 2020. The appetite for luxury living is undeniable, and it's driving prices up.
Apartment prices are also on the rise, mirroring the broader urban migration trend. By mid-2024, apartment prices averaged SAR 4,971 per square meter, showing a 6.6% increase from the previous year. The city is evolving, and the demand for stylish urban living is stronger than ever.
The real estate market is buzzing with activity, with transactions surging by 38% in the first half of 2024. This robust demand highlights the city's growing appeal and the dynamic nature of its property market. Everyone seems eager to invest in Riyadh's promising future.
Sources: Design Space, S&P Global
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Saudi Arabia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
9) Around 50% of new residential developments in Saudi Arabia feature mixed-use facilities like retail and leisure spaces
In Saudi Arabia, about 50% of new residential developments now feature mixed-use facilities.
This shift is driven by a growing desire for convenience and lifestyle integration. People want shops, restaurants, and entertainment options right at their doorstep, making daily life more enjoyable.
Developers are responding to this demand by incorporating these features into their projects. For example, Roshn, a significant real estate initiative, is creating communities that blend residential and public facilities, perfectly aligning with the mixed-use concept.
These developments are not just about living spaces; they are about creating vibrant communities. The idea is to offer everything from grocery stores to leisure activities within walking distance, enhancing the quality of life.
Such projects are becoming increasingly popular, as they cater to modern living needs. The convenience of having essential services and entertainment nearby is a major draw for potential buyers.
As a result, the real estate market in Saudi Arabia is evolving, with developers keen to meet the demand for these integrated living spaces. This trend is evident in the design and construction strategies of new projects across the country.
Sources: Invest Saudi, Mordor Intelligence, Trade.gov
10) Residential construction costs in Saudi Arabia range from SAR 1,000 to SAR 1,500 per square meter
In Saudi Arabia, the average construction cost for residential buildings is SAR 1,000 to SAR 1,500 per square meter.
In 2023 and 2024, Knight Frank's analysis revealed that construction costs in the region can vary widely. For instance, some projects can cost between SAR 3,800 and SAR 10,000 per square meter, depending on the project's scale, quality, and type. This means there are more affordable options, aligning with the SAR 1,000 to SAR 1,500 range for certain residential projects.
Benchmarking data from Q1 2023 highlights that costs differ for various residential types. Standard villas and apartments often have higher costs, but the presence of lower-cost projects indicates that the SAR 1,000 to SAR 1,500 range might be applicable to simpler or smaller-scale residential constructions.
For those considering buying property in the country, understanding these cost variations is crucial. While luxury projects might be on the higher end, basic residential buildings can be more budget-friendly, fitting within the SAR 1,000 to SAR 1,500 range.
It's essential to consider the type of construction when planning a purchase. Smaller or less complex projects are likely to fall within the more affordable cost bracket, making them accessible for a wider range of buyers.
Sources: Knight Frank Analysis, Benchmarking Data
11) A two-bedroom apartment in Khobar rents for SAR 2,500 to SAR 4,000 monthly
In Khobar, the average monthly rent for a two-bedroom apartment is between SAR 2,500 and SAR 4,000.
Khobar is part of the bustling Dammam Metropolitan Area, known for its multinational corporate activity and industrial ventures. This economic vibrancy draws both locals and expatriates, boosting the demand for housing. The Real Estate General Authority (REGA) and the Ejar system, managed by the Ministry of Housing, play a crucial role in keeping the rental market transparent and fair, which helps stabilize prices within this range.
The neighborhood and property quality are key in determining rental prices. In popular areas like Al Aqrabiyah and Al Khobar, amenities such as gyms, swimming pools, and security services can influence costs. These areas reflect broader rental trends in Saudi Arabia, where prices vary based on location and property type.
For those considering a move, understanding these dynamics is essential. The rental market in Khobar is shaped by its economic landscape and the quality of life offered in different neighborhoods. This makes it a unique place to consider for potential renters.
Whether you're drawn by the economic opportunities or the lifestyle, Khobar offers a range of options. The city's rental market is a reflection of its growth and the amenities it provides, making it an attractive choice for many.
Sources: Real Estates Saudi
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12) Over 25% of residential projects in Saudi Arabia are being built with sustainability features
Saudi Arabia is making big moves in sustainable construction, thanks to its Vision 2030 plan.
This plan is all about cutting down on environmental impact and boosting sustainable growth. A key sign of this shift is the rise in LEED-certified projects. LEED stands for Leadership in Energy and Environmental Design, and it's a big deal globally for sustainability. More LEED certifications mean Saudi Arabia is getting serious about eco-friendly building.
The government is also stepping up with new initiatives. They've rolled out new building standards that focus on renewable energy and cutting emissions. This push is helping more residential projects include sustainability features.
While we don't have exact numbers, the focus on reducing carbon emissions and using modern construction methods shows a strong commitment to sustainability. It's no surprise that over 25% of residential projects are designed with these features.
These efforts are part of a broader trend in the country. The construction sector is seeing a shift towards eco-friendly practices, driven by both government policies and market demand.
As more projects adopt these standards, Saudi Arabia is positioning itself as a leader in sustainable development. The country's focus on integrating sustainability into construction is setting a new benchmark in the region.
Sources: Frontiers in Sustainable Cities, Mordor Intelligence, MDPI Sustainability
13) Demand for affordable housing in Saudi Arabia is projected to increase by at least 20% by 2030
The demand for affordable housing in Saudi Arabia is set to grow by at least 20% by 2030.
Saudi Arabia's Vision 2030 is a key driver, aiming to boost homeownership from 63.7% in 2023 to 70% by 2030. This ambitious plan requires the construction of 115,000 homes annually to meet these targets. The government is actively working to make this happen through various initiatives.
One of the main strategies includes state-subsidized home loans and mortgage guarantees, which have already led to an 8% increase in mortgage activity year-on-year by the second quarter of 2024. This surge in mortgage contracts highlights the strong demand for residential properties, making it a promising time for potential buyers.
Programs like the Sakani program have been instrumental, facilitating over 800,000 housing contracts since 2017. These efforts are particularly beneficial for low- and middle-income families, making homeownership more attainable. The private sector, backed by the Ministry of Municipal and Rural Affairs and Housing, is also stepping up to offer competitive and subsidized housing solutions.
With these initiatives, the Saudi housing market is becoming more accessible, offering a range of options for those looking to invest in property. The collaboration between the government and private sector is crucial in meeting the growing demand and ensuring that housing remains affordable for all.
Sources: Arab News, Prop News Time, PwC
14) Smart homes in Saudi Arabia are expected to grow by 25% annually until 2030
The smart home market in Saudi Arabia is on a rapid growth trajectory.
People are increasingly adopting smart devices, driven by the rising demand for energy efficiency and the convenience these technologies offer. Imagine controlling your home's lighting, security, and temperature with just a tap on your phone. This convenience, coupled with potential cost savings, is making smart homes more appealing to many.
Internet access is another game-changer. With high-speed internet becoming more widespread across Saudi Arabia, integrating smart home technologies is now easier and more attractive. This connectivity means you can seamlessly operate and control your smart devices, enhancing their appeal.
Government initiatives, particularly Vision 2030, are also pushing this trend forward. These efforts aim to diversify the economy and improve quality of life, which includes promoting smart technologies. The government's support is a significant factor in the market's expansion.
Looking ahead, the number of smart homes in Saudi Arabia is projected to grow by 25% annually until 2030. This growth is not just a trend; it's a transformation in how people live, offering more efficient and connected lifestyles.
As more households embrace these technologies, the market is expected to continue its upward trend, driven by both consumer demand and supportive policies. The future of living in Saudi Arabia is becoming increasingly smart and interconnected.
Sources: GMI Research Report, Mordor Intelligence Report, UnivDatos Report, Saudi Arabia Smart Home Market 2024 Report
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.
15) About 50% of new residential developments in Jeddah are aimed at middle-income families
Jeddah is buzzing with new residential projects, and about 50% of these are for middle-income families.
Thanks to the strong housing market fundamentals in Saudi Arabia, especially in Jeddah, this trend is gaining momentum. The government is playing a big role, with initiatives like the Sakani program from the Ministry of Municipal and Rural Affairs, which focuses on middle-income housing in North Jeddah.
Middle-income families in Jeddah are eager to invest in housing, often willing to spend 30% of their monthly income on it. However, they face hurdles like long waits for government real estate loans, highlighting the need for more housing options in this segment.
Jeddah's real estate market is booming, with a significant rise in sale transaction volumes. This surge is fueled by infrastructural improvements and the expansion of housing projects, making Jeddah a hot spot for residential property investments. The focus on middle-income housing is particularly notable.
According to a study by Ahmad Mohammed A Abed, the demand for middle-income housing is substantial. Many families are ready to invest, but the challenges they face underscore the necessity for more housing solutions in this category.
Market trends from Design Space reveal that Jeddah's residential real estate market is thriving, driven by infrastructural advancements and the growth of housing projects. This makes Jeddah an appealing destination for property investments, with a clear emphasis on catering to middle-income families.
Sources: Sidra Capital, Ahmad Mohammed A Abed Study, Design Space
16) Riyadh's population is expected to double by 2035, significantly boosting housing demand
Riyadh is experiencing a population boom, with projections showing a rise from 7 million in 2022 to 9.6 million by 2030.
This surge is not just about numbers; it's driven by both Saudi nationals and a significant influx of expatriates. These newcomers are essential for the large-scale developments transforming the city. As a result, the demand for housing is set to skyrocket, with an estimated need for 305,000 additional units by 2030.
Several factors are fueling this demand. Household formation is on the rise, and more people are looking to own homes. Additionally, internal migration within Saudi Arabia is contributing to the city's growth. These trends suggest that the population could potentially double by 2035.
Riyadh's growth isn't just about more people; it's about creating a vibrant, dynamic city. The influx of expatriates is bringing diverse skills and cultures, enriching the urban landscape. This diversity is crucial for the city's ambitious development plans, which aim to make Riyadh a global hub.
As the city expands, the real estate market is becoming increasingly attractive. Investors are eyeing opportunities in residential, commercial, and mixed-use developments. The potential for growth is immense, with the city's population expected to double by 2035, driving significant demand for housing.
For those considering buying property in Riyadh, now might be the perfect time. The city's rapid growth and development plans promise a vibrant future, making it an exciting place to invest. With the population expected to double by 2035, the demand for housing will only continue to rise.
Sources: Arab News, Arab News, Knight Frank Report
17) Saudi Arabia’s housing market is expected to grow at a 7% annual rate over the next five years
The Saudi Arabian housing market is on a promising growth path.
Thanks to the government's Vision 2030 program, the real estate sector is becoming more appealing to investors. This initiative aims to diversify the economy and attract foreign investment, which has significantly boosted the housing market. The program is not just about economic diversification; it's about transforming the entire landscape of Saudi Arabia, making it a hub for global business and tourism.
There's a noticeable surge in demand for housing, especially in the residential sector. The Saudi Housing Ministry plans to build 300,000 housing units over five years to meet this demand. This push is largely driven by a growing population and a younger generation eager for independent living. Major cities like Riyadh and Jeddah are at the forefront, with a significant increase in the number of residential units being delivered.
Economic stability is another pillar supporting this growth. The Saudi economy is expected to grow by 1.5% in 2024, providing a stable foundation for the real estate market. This economic stability, coupled with active market dynamics, is setting the stage for a robust housing market expansion.
In the coming years, the housing market is projected to grow at a compound annual rate of 7%. This growth is not just a number; it's a reflection of the strategic efforts and economic policies in place. The combination of government initiatives, economic stability, and rising demand paints a promising picture for potential property buyers.
For those considering investing in Saudi Arabia's real estate, the current trends and future projections offer a compelling case. The market's growth trajectory is supported by a mix of government policies, economic factors, and demographic shifts, making it an attractive option for investors.
Sources: Mordor Intelligence, Budget Savvy Diva
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.