Saudi Arabia Real Estate Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Saudi Arabia Real Estate Market Size

Saudi Arabia Real Estate Market Trends & Growth Drivers

Adoption of Digital Technology Is Key Trend

• The acceptance of digital solutions to streamline processes, improve operational efficiency, and enhance customer experiences, is a key Saudi Arabian real estate market trend.
• The usage of online platforms to search for the properties in the country has risen significantly in recent years. Portals such as Saudi Property and Aqarmap help prospective buyers search for a variety of properties as per their budget and connect with developers and agents.
• Digital technology enables 3D visualization and virtual tours of the property without the need for physical visits. It is being used to offer prospective buyers and tenants a realistic view of properties.
• Artificial intelligence and data analytics are being utilized to analyze the property rates and market trends, and personalize property recommendations for tenants and buyers. This helps key stakeholders to make better decisions and improve their market strategies.

Increasing Construction Activities in the Country Are Key Driver

• The increasing investments in the construction sector are expected to drive the real estate market in Saudi Arabia. The construction industry is expected to witness strong growth in the coming years owing to the large number of construction projects related to the urban, transport, and utility sectors in the execution and tender/bidding phases.
• In November 2023, as per the minister of Hajj, Saudi Arabia planned to invest USD 54 billion in the expansion of the Grand Mosque in Mecca. Additionally, the Saudi Arabian government plans to invest USD 87.4 billion for the improvement of the annual Hajj pilgrimage infrastructure.
• The country is expected to witness tremendous growth in construction activities supported by the government. For example, the smart city initiatives have been launched under the National Transformation Program 2020 and the Saudi Vision 2030. The major aim of the initiative is to enhance urban development in the country through the application of this initiative and further increase the people’s satisfaction, make cities more competitive, attract local & foreign investments, create job opportunities, and achieve urban sustainability.
• Along with megaprojects, such as AMAALA, King Salman Park, QIDDIYA, Red Sea project, Jabal Omar, Diriyah Gate, NEOM, and King Abdullah Financial District, the Saudi Arabian government has also invested USD 2 million in home maintenance startups, such as B8ak, FalconViz, Ajeer, and Muqawiloon.

Scarcity of Housing Options and Regulatory Constraints on Mortgages

• The lack of housing spaces and the regulation of mortgages present significant challenges for Saudi Arabia's real estate market, impacting both supply and demand dynamics.
• The country has been experiencing rapid growth in population due to immigration. This is causing limited availability of housing units in urban areas and, in turn, supply-side challenges in terms of affordable housing options.
• Despite the efforts by the government to encourage housing development through initiatives such as the Ministry of Housing's programs, such as the Sakani program, the pace of construction to address the rising demand has been rather slow of late.
• Regulatory hurdles, infrastructure challenges, and bureaucratic processes are contributing in the delay of construction projects in the country.
• The imbalance between the supply and demand, coupled with the limited mortgage financing, can contribute to price volatility in the real estate market. Prices may experience sharp fluctuations in response to the changes in market conditions, thereby exacerbating affordability concerns for buyers.

Saudi Arabia Real Estate Industry Outlook

Property Type Insights

• The residential category is projected to grow at the highest CAGR, of 8.6%, during 2024–2030, as well as hold the largest market share. This is attributed to the rising demand for apartments, villas, and townhouses for individuals and families.
• There is rapid growth in the population, which is creating the demand for affordable residential properties in urban areas.
• The commercial real estate category holds a significant market share, as This category includes office buildings, retail spaces, hotels, and many other pieces of infrastructure. The significant share is attributed to the economic trends, comprising investment activity, business expansion, as well as consumer spending.

During the study, we have analyzed three property types in the report:

• Residential (Largest and Fastest-Growing Category)
• Commercial
• Industrial

Size Range Analysis

• The 5,000–50,000 sq m category holds the largest market share, of 50%, in 2024. This is due to the inclusion of an extensive range of properties in this size range. It includes residential buildings, commercial complexes, and mixed-use developments, which cater to various needs and, in turn, propels the demand for properties this size.
• Most large properties in the kingdom fall in this size range, as do many of the projects underway.
• As urbanization and infrastructure development continue to expand across the country, there is considerable potential for large-scale projects within this size range to shape the future of Saudi Arabia's real estate and contribute to its economic development.

Below are the size ranges covered in the report:

• 30–1,000 sq m
• 1,000–5,000 sq m
• 5,000–50,000 sq m (Largest and Fastest-Growing Category)
• More than 50,000 sq m

Booking Mode Insights

• Based on booking mode, the rental category holds significant share in 2024. This is primarily due to the increasing prices of houses in the country, which is impelling more people to rent one rather than buying it.
• The sales category is projected to grow at the highest CAGR, of 8.7%, during 2024–2030. This is due to the population growth, urbanization, and increasing disposable income.
• Government policies aimed at increasing homeownership, such as subsidized mortgage programs, can further stimulate property sales.

The following are the booking modes that are included in the report:

• Sales (Largest and Fastest-Growing Category)
• Rental
• Lease

Al-Riyadh Is Largest Market

• Geographically, Al-Riyadh holds the largest market share, of 40%, in 2024. This dominance is due to the growing number of real estate projects and luxurious apartments for sale in the region.
• The growing economy and the lucrative returns on investment in off-plan real estate make the region an ideal choice to invest in the real estate sector.
• The Riyadh real estate market offers diverse investment opportunities across various sectors, including residential, commercial, hospitality, and retail. The region has various government megaprojects underway, including, the NEOM Project which comprises Norlana, Utamo, Siranna, Epicon, Leyja, The Line, and Trojena.
• The Eastern region is the fastest-growing market, advancing at a CAGR of 8.9% during 2024–2030. This growth is due to the rapid urbanization and population growth in the region. The internal migration from rural areas to urban centers and ongoing initiatives for economic development drive the market here.
• Additionally, the Eastern Province, particularly the cities of Dammam, Khobar, and Dhahran, is a key industrial and commercial hub, attracting investment in industrial, residential, and commercial real estate.

The provinces analyzed in this report include:

• Al-Riyadh (Largest Category)
• Makkah
• Al-Madinah
• Al-Qaseem
• Eastern Region (Fastest-Growing Category)
• Aseer
• Tabouk
• Hayel
• Northern Border
• Jazan
• Najran
• Al-Baha
• Al-Jouf

Market Concentration – Medium

The market for real estate in Saudi Arabia is slightly fragmented, owing to presence of several key players. There is a clear dominance of domestic key players in the kingdom due to the huge scale of construction activities. There are various ongoing and upcoming megaprojects that the key players are eying and investing in.

Further, numerous international real estate developers as well as investors are taking an interest in the Saudi Arabian real estate market, which is offering lucrative opportunities. Key players, such as Emaar, are engaged in various major projects in the country.

Saudi Arabia Real Estate Industry News

• In July 2022, SEDCO Capital REIT Fund’s board approved the acquisition of two income-generating real estate assets in Riyadh and Jeddah worth USD 187 million (SR 700 million).