Saudi Arabia Real Estate Market, By Type (Real Estate Rental, Real Estate Agency, Brokerage), By Mode (Online, Offline), By Property Type (Fully Furnished, Semi Furnished, Unfurnished), By Region, Competition, Forecast & Opportunities, 2019-2029F

Market Overview

Saudi Arabia Real Estate Market was valued at USD 196 Billion in 2023 and is expected to reach USD 333 Billion by 2029 with a CAGR of 9.11% during the forecast period. 

Real estate refers to property consisting of land and the buildings or structures on it, along with the natural resources, such as crops, minerals, or water, that may be attached. It includes residential, commercial, industrial, and agricultural properties, each serving different purposes. Residential real estate involves properties used for living, such as single-family homes, apartments, and condominiums. Commercial real estate pertains to properties used for business activities, like office buildings, retail spaces, and warehouses. Industrial real estate includes factories, manufacturing plants, and distribution centers, while agricultural real estate refers to farmland and ranches.

The real estate market is influenced by various factors, including supply and demand, economic conditions, interest rates, and government policies. Investing in real estate can be a lucrative venture, offering opportunities for long-term wealth creation through property appreciation or rental income. Real estate transactions typically involve buying, selling, leasing, or renting properties. Real estate professionals, such as agents, brokers, and appraisers, facilitate these transactions by assisting clients in identifying properties, negotiating deals, and ensuring legal compliance.

Key Market Drivers

Economic Diversification and Vision 2030

Saudi Arabia’s Vision 2030 is one of the key drivers reshaping the real estate market in the country. This ambitious national plan aims to diversify the Saudi economy, reducing its reliance on oil revenues by investing in various non-oil sectors, including real estate, tourism, entertainment, and infrastructure. As a result, massive investments are being poured into developing new cities, mixed-use developments, and commercial spaces that align with the goals of Vision 2030.

The government's commitment to Vision 2030 has spurred several real estate developments, including mega-projects such as NEOM, the Red Sea Project, and Qiddiya, which are designed to attract foreign investment, enhance local tourism, and provide new economic opportunities. These large-scale developments are transforming the landscape of the country, creating demand for both residential and commercial real estate, as they aim to cater to a growing population and the evolving needs of businesses and international investors.

Economic diversification also involves modernizing infrastructure to support the growing needs of various sectors. Investments in transportation, education, healthcare, and technological advancements are resulting in the creation of new hubs and economic zones, which, in turn, increase demand for real estate in these areas. Cities like Riyadh and Jeddah, which already have robust real estate markets, are witnessing an influx of projects aimed at enhancing both the quality of life for residents and the attractiveness of the kingdom to foreign businesses.

As Vision 2030 progresses, it is expected that the real estate market will continue to benefit from these ongoing changes. The diversification of the economy will not only create more job opportunities but will also encourage people to move to different parts of the country, boosting both the demand for residential properties and the need for commercial spaces. In addition, foreign investment in the real estate market is expected to increase, further contributing to the growth of the sector.

Population Growth and Urbanization

Population growth and urbanization are significant drivers of the Saudi Arabia real estate market. Saudi Arabia has a rapidly growing population, which has been a key factor in increasing demand for housing, commercial spaces, and infrastructure. According to estimates, the population of Saudi Arabia is expected to continue growing over the coming decades, placing increasing pressure on the real estate market to accommodate the needs of this expanding population.

Saudi Arabia's population is not only growing in size but is also becoming more urbanized. The country has witnessed a major shift from rural to urban living over the past few decades, with more people moving to cities in search of employment, education, and better living standards. Major urban centers like Riyadh, Jeddah, and Dammam are experiencing population booms, which is driving up demand for both residential and commercial real estate. This trend is also leading to the expansion of existing cities and the creation of new urban areas to meet the needs of an increasingly urbanized society.

As the urban population grows, there is a corresponding rise in demand for residential properties, particularly affordable housing. The government's initiatives, such as the Saudi Real Estate Refinance Company (SRC) and the Sakani housing program, aim to increase the availability of homes for the growing population. These programs support first-time homebuyers by providing financing options and promoting homeownership, which in turn contributes to the development of the real estate market.

Urbanization also fuels the need for commercial spaces such as offices, retail establishments, and hospitality services. With the increasing number of businesses and foreign investments entering the market, there is a higher demand for modern office spaces, retail malls, and hotels. The rapid pace of urbanization is likely to continue shaping the real estate market in the coming years, with cities expanding horizontally and vertically to accommodate the growing population and their needs.

Government Initiatives and Regulations

The Saudi government has introduced several policies and initiatives in recent years that have significantly influenced the real estate market. These government-driven reforms are aimed at stimulating the sector, attracting foreign investments, and improving the overall business environment in the kingdom. Through initiatives such as housing programs, infrastructure development, and regulatory changes, the government has worked to make real estate development and ownership more accessible and attractive to both citizens and foreign investors.

One of the most notable government initiatives is the Saudi Vision 2030, which emphasizes the diversification of the economy, with real estate being a key pillar. Under Vision 2030, the government has introduced a range of policies that directly impact the real estate sector, such as encouraging the development of mixed-use cities, expanding urban areas, and enhancing infrastructure. In particular, the government is focusing on increasing the availability of affordable housing through initiatives like the Sakani housing program and mortgage schemes designed to make homeownership more accessible. Moreover, the Saudi government has introduced regulations that are aimed at streamlining the real estate development process. These include the establishment of the Saudi Real Estate Authority, which is responsible for overseeing real estate activities in the country. The government has also introduced reforms aimed at improving transparency and reducing bureaucracy in real estate transactions, which has attracted more foreign investors to the market.

The government has also taken steps to regulate the rental market, introducing rent control measures and strengthening tenant protections. This has helped stabilize the rental market, particularly in major cities, by ensuring that rents are kept at reasonable levels. The introduction of property taxes, including a VAT on real estate transactions and the implementation of the Saudi Land and Property Tax, has also contributed to the government's ability to generate revenue from the real estate sector.

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Key Market Challenges

Overdependence on Oil Revenue and Market Volatility

One of the significant challenges facing the Saudi Arabia real estate market is its overdependence on oil revenues, which has a direct impact on the stability of the sector. While the government has been actively working to diversify the economy under Vision 2030, the real estate market remains closely tied to the oil industry’s performance. The Saudi economy’s heavy reliance on oil exports means that fluctuations in global oil prices can significantly affect real estate demand and investment.

When oil prices are high, the economy tends to grow, leading to an increase in government spending and private investment. This growth fuels demand for commercial and residential properties as businesses expand and more people relocate for work. However, when oil prices drop, the country’s economy can suffer, resulting in lower government revenues, reduced investment, and a slowdown in real estate activity. The 2014 oil price crash, for instance, led to a slowdown in the Saudi real estate market, with lower demand for luxury and commercial properties, particularly in major cities like Riyadh and Jeddah.

Although the government’s efforts to diversify the economy are slowly bearing fruit, there is still a significant lag in the development of non-oil sectors that can effectively support the real estate market during times of oil price volatility. If global oil prices fluctuate again, it could lead to a reduction in public and private sector investment, affecting the demand for real estate, especially in luxury and commercial segments. Additionally, with the ongoing shift to renewable energy sources worldwide, the reliance on oil may continue to put pressure on the economy, making the real estate market vulnerable to economic downturns caused by global energy transitions.

To mitigate this risk, the Saudi government has made efforts to attract foreign investment, encourage diversification in the economy, and increase the participation of non-oil sectors in the real estate market. However, the challenge of maintaining market stability in the face of fluctuating oil prices remains a critical concern for the Saudi real estate market.

Housing Affordability and Supply-Demand Imbalance

Another significant challenge facing the Saudi Arabia real estate market is housing affordability, especially for middle- and low-income citizens. While the government has introduced various housing initiatives, such as the Sakani program, which offers subsidies and financing solutions to help Saudi families purchase homes, the overall supply of affordable housing still does not meet the growing demand. This imbalance has led to significant challenges in ensuring that the rapidly expanding population can access affordable homes.

Saudi Arabia's population is growing at a fast pace, with many young people entering the housing market for the first time. At the same time, urbanization is leading to an increased demand for residential properties, especially in major cities like Riyadh and Jeddah. However, there is a mismatch between the types of housing available and the needs of the population. Much of the new residential development focuses on luxury or high-end properties, which are often out of reach for the majority of citizens, especially first-time homebuyers or those with modest incomes.

The high cost of land, construction materials, and financing also contributes to the affordability issue. Land prices in key urban areas can be prohibitively expensive, making it challenging to build affordable homes. Developers may prefer to focus on high-end residential or commercial projects that yield greater profits, rather than invest in the more affordable housing segment. The availability of financing, while improving, remains a hurdle for many potential homeowners. Many Saudis are unable to secure the necessary loans due to high interest rates or strict lending criteria, further limiting their ability to purchase homes.

The government has been actively addressing this issue by introducing initiatives such as the Saudi Real Estate Refinance Company (SRC) and providing more accessible mortgage options, which aim to make homeownership more attainable. Additionally, the government’s focus on affordable housing projects is expected to increase the supply of lower-cost homes in the coming years. However, it will take time to create a substantial shift in the housing market that fully meets the demand for affordable properties. Until this issue is adequately addressed, housing affordability will remain a key challenge for Saudi Arabia’s real estate sector.

Key Market Trends

Growth of Affordable Housing Projects

A prominent trend in the Saudi Arabia real estate market is the increasing focus on affordable housing. With the country’s population growing rapidly, particularly in urban centers, the demand for affordable homes has surged. This trend is fueled by several factors, including a young population, urbanization, and the government's commitment to improving the living standards of its citizens. The Saudi government has been heavily investing in affordable housing initiatives as part of Vision 2030, with programs like the Sakani housing initiative aimed at helping Saudi nationals, especially first-time homebuyers, purchase homes.

To address the growing need for affordable housing, developers have shifted focus from luxury residential projects to more budget-friendly options. These projects often include low- and middle-income homes, with an emphasis on maximizing space efficiency and reducing construction costs. Developers are finding innovative ways to build cost-effective homes, such as using modular or prefabricated construction methods. This trend has been particularly noticeable in major cities like Riyadh, Jeddah, and Dammam, where demand for affordable housing is highest.

In addition, government policies are also driving the trend toward affordable housing. The introduction of initiatives like the Saudi Real Estate Refinance Company (SRC) has helped make home loans more accessible to low-income families. These initiatives are designed to address the supply-demand gap in the housing market by offering affordable financing options, subsidies, and tax incentives for developers to build more affordable homes.

Rise in Mixed-Use Developments

Another significant trend in Saudi Arabia’s real estate market is the rapid rise of mixed-use developments. As urban centers continue to grow and demand for both residential and commercial spaces increases, mixed-use developments have become increasingly popular. These projects combine residential, commercial, and sometimes recreational spaces in a single location, offering a more integrated living experience that meets the needs of modern urban dwellers.

Mixed-use developments are particularly in demand in cities like Riyadh, Jeddah, and the newly developing areas under Vision 2030. The convenience of having residential, retail, and office spaces within close proximity aligns with the evolving lifestyles of Saudis, who seek more walkable communities and integrated living environments. With Saudi Arabia’s population becoming more urbanized, these developments allow for greater convenience and efficiency, reducing the need for long commutes while offering high-quality living, shopping, and working environments all in one place.

The Saudi government’s push for economic diversification through Vision 2030 is also contributing to the rise of mixed-use developments. As the economy shifts away from oil reliance and toward sectors like tourism, retail, entertainment, and technology, there is an increasing demand for spaces that cater to a variety of purposes. Mixed-use developments support these sectors by providing spaces for retail outlets, office buildings, hotels, and leisure facilities, all within close proximity to residential units.

Some of the most notable mixed-use developments in Saudi Arabia include the King Abdullah Financial District in Riyadh and various developments around the Red Sea Project and NEOM. These large-scale projects combine elements of urban planning, environmental sustainability, and modern architecture, reflecting Saudi Arabia's ambitious vision for future cities.

Increased Demand for Commercial Real Estate

The demand for commercial real estate in Saudi Arabia has been on the rise, driven by the country's economic diversification efforts and the growth of sectors such as technology, tourism, and entertainment. As part of Vision 2030, the Saudi government has been creating an environment conducive to the growth of non-oil industries, which, in turn, increases the demand for office space, retail spaces, and logistics facilities.

A notable trend is the demand for Grade A office spaces, especially in key urban centers such as Riyadh and Jeddah. International businesses, as well as local enterprises, are increasingly seeking high-quality office buildings equipped with modern amenities and sustainable designs. This demand is being driven by the expansion of industries such as financial services, information technology, and professional services, which require modern, flexible office spaces. Additionally, the growth of Saudi Arabia’s tourism and entertainment sectors has led to an uptick in the demand for retail and hospitality spaces. With the government investing in mega-projects like the Red Sea Project, Qiddiya, and NEOM, there is an increased need for commercial real estate to accommodate the influx of international and local visitors. As tourism and leisure activities become central to Saudi Arabia’s economic strategy, retail spaces, hotels, and entertainment venues are in high demand.

The logistics and warehousing sector is also experiencing significant growth. With the rise of e-commerce and global trade, demand for logistics centers and warehouses has surged. The government is actively working to improve infrastructure, including ports, airports, and transportation networks, to facilitate the growth of this sector.

In response to these growing demands, developers are increasingly focusing on creating high-quality commercial real estate that meets the needs of businesses in the modern economy. The commercial real estate market is expected to continue thriving as Saudi Arabia pushes forward with its Vision 2030 initiatives.

Segmental Insights

Type Insights

The Real Estate Rental held the largest market share in 2023.  Real estate rental dominates the Saudi Arabia market due to several key factors. The country’s rapid urbanization, population growth, and the large influx of expatriates contribute significantly to the demand for rental properties, especially in major cities like Riyadh, Jeddah, and Dammam. Saudi Arabia’s younger population, which is increasingly migrating to urban centers for better job prospects and education, often prefers renting over buying due to financial constraints or short-term housing needs.

Many expatriates, who make up a significant portion of the workforce, tend to rent rather than purchase property due to temporary work contracts. This results in a constant demand for both residential and commercial rental spaces. The rental market is also influenced by the ease of rental agreements and the flexibility they offer to tenants, in contrast to the complexities involved in property ownership and long-term financial commitments.

Saudi Arabia's housing market has faced challenges in providing sufficient affordable housing options for the growing population, which further boosts the demand for rental properties. While property ownership is becoming more accessible through government programs, rental properties remain the preferred choice for many residents. The government’s ongoing urban development projects and infrastructure investments are expected to continue driving the growth of the real estate rental sector in the coming years.

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Regional Insights

Riyadh held the largest market share in 2023.  The Riyadh region dominates the Saudi Arabia real estate market due to several key factors, making it the focal point for residential, commercial, and industrial real estate activities. As the capital city, Riyadh is the political, economic, and cultural hub of the kingdom, housing major government institutions, foreign embassies, and corporate headquarters. Its status as the center of decision-making and business drives substantial demand for both commercial and residential real estate.

Riyadh also benefits from continuous population growth, urbanization, and a young workforce, leading to increased demand for housing and commercial properties. The city's ongoing development under Vision 2030, including major projects like the King Abdullah Financial District and the Riyadh Metro, further fuels the real estate market by creating new business districts and improving infrastructure, which attracts both local and foreign investments.

The city’s strategic location in the heart of Saudi Arabia and its role as a logistics and trade hub ensure a steady demand for industrial spaces, including warehouses and logistics centers. Riyadh’s centrality and its emerging status as a regional business hub make it a prime location for long-term real estate investment, with significant opportunities across all sectors, from residential to commercial to industrial properties. This dynamic growth trajectory has solidified Riyadh’s dominance in the kingdom’s real estate market.

Recent Developments

• In November 2024, Mulkia Investment Co. formally announced the initiation of the Mulkia Al Anwar Real Estate Fund, a private, closed-end real estate fund with a total investment capacity of approximately USD 170 million. The fund began its operations with the strategic objective of acquiring around 2.6 million square meters of undeveloped land in the northern region of Buraydah city.

Key Market Players

• CBRE Group
• Jones Lang Lasalle Incorporated
• Simon Media Properties, LLC
• DLF Limited
• Prologis, Inc.
• Cushman & Wakefield Debenham Tie Leung Limited
• Boston Hub Real Estate Inc.
• Colliers International Property Consultants, Inc.

Report Scope:

In this report, the Saudi Arabia Real Estate Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

·         Saudi Arabia Real Estate Market, By Type:

o   Real Estate Rental

o   Real Estate Agency

o   Brokerage

·         Saudi Arabia Real Estate Market, By Mode:

o   Online

o   Offline

·         Saudi Arabia Real Estate Market, By Property Type:

o   Fully Furnished

o   Semi Furnished

o   Unfurnished

·         Saudi Arabia Real Estate Market, By Region:

o   Riyadh

o   Makkah

o   Madinah

o   Eastern Province

o   Dammam

o   Rest of Saudi Arabia

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Saudi Arabia Real Estate Market.

Available Customizations:

Saudi Arabia Real Estate Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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