Riyadh’s Residential Transactions Soar 52% as Saudi Housing Market Flourishes

Introduction

The Saudi housing market is experiencing a remarkable transformation, with Riyadh leading the charge. Recent data reveals a staggering 51.6 percent increase in residential transactions in the capital city over the year ending in the second quarter of 2024. This surge reflects not only the resilience of the real estate sector but also the broader economic ambitions of Saudi Arabia under its Vision 2030 initiative.

Transaction Growth in Riyadh

According to a comprehensive report by real estate services firm CBRE, Riyadh recorded approximately 18,500 residential sales valued at SR26.6 billion (around $7.08 billion) during this period. This growth is indicative of a thriving market, driven by a combination of population growth, government-backed investment projects, and an increasing demand for housing.

In addition to Riyadh, other major cities in Saudi Arabia are also witnessing significant growth. Jeddah saw a 43.2 percent year-on-year increase in transaction volumes, totaling 9,392 sales, while the Dammam Metropolitan Area experienced a 22.4 percent rise, with 2,390 sales valued at SR2.4 billion.

Vision 2030 and Housing Initiatives

Saudi Arabia’s Vision 2030 aims to achieve a 70 percent home ownership rate by the end of the decade, a goal that is being actively supported through various initiatives. One of the key programs is the Sakani initiative, which provides personalized housing and financing solutions to help families secure their homes.

Matthew Green, head of research for the Middle East and North Africa at CBRE, emphasized the strong fundamentals of Saudi Arabia’s residential sector. He noted that Riyadh is particularly showing signs of an undersupplied market, driven by robust employment and population growth, which is further exacerbated by government investment projects.

Rental Market Dynamics

The first half of 2024 also saw a notable increase in Riyadh’s residential rental transactions, which rose by 6.1 percent to 274,146. In contrast, Jeddah experienced a slight decline of 2.3 percent, totaling 183,894 rental transactions. This divergence highlights the varying dynamics within the housing markets of different cities.

Average apartment prices in Riyadh have appreciated approximately 11.7 percent annually since the third quarter of 2020, reaching SR5,000 per square meter by the end of the second quarter of 2024. Meanwhile, average villa prices have shown a consistent upward trend, currently resting around SR5,824 per square meter after a year-on-year increase of 3.3 percent.

Price Trends in Jeddah

In Jeddah, the average apartment prices peaked before experiencing a slight dip of 0.9 percent in the second quarter of 2024, now sitting at SR3,945 per square meter. Villa prices in Jeddah have seen a compound annual growth rate of 4.4 percent since 2020, reaching SR5,707 per square meter.

Despite the overall positive trends, there remains a segment of the population seeking suitable financing options for home acquisition. Government efforts to enhance retail financing through local banks are ongoing, but challenges persist.

District Price Analysis in Riyadh

The report by CBRE also highlighted the varying price ranges across different districts in Riyadh. Hittin and Al-Malqa emerged as the most expensive districts for villas, with prices ranging from SR9,500 to SR13,500 per square meter. Conversely, areas such as As-Suwaidi and Al-Aziziyah offered more affordable options, with average villa prices ranging from SR2,150 to SR4,800 per square meter.

Popular districts like As-Sulimaniyah, Al-Taawun, and An Nakheel continue to command the highest average apartment prices, with As-Sulimaniyah averaging between SR6,600 and SR10,500 per square meter.

Jeddah’s Residential Landscape

In Jeddah, the Ash Shati and Al-Murjan districts command the highest villa prices, ranging from SR7,500 to SR13,350 per square meter. In contrast, more budget-friendly options can be found in areas like Al-Amir Fawwaz, starting at SR2,300 per square meter.

The steady delivery of new apartments in Jeddah over the past 18 months has led to fluctuations in average apartment sale prices. The influx of new supply in districts such as Al-Marwah, As Salamah, and As Safa has saturated the market, impacting average prices.

Conclusion

As investment projects and population growth continue to stimulate the housing sector, Riyadh, Jeddah, and the Dammam Metropolitan Area are poised for sustained expansion. The real estate market is not only a vital component of the Kingdom’s economic diversification strategy under Vision 2030 but also a reflection of the changing dynamics in Saudi society. With strong fundamentals and ongoing government support, the future of Saudi Arabia’s residential market looks promising, making it an exciting time for both investors and homebuyers alike.