The real estate market in Saudi Arabia experienced a significant surge in property deals during the first half of 2024. According to recent reports, the number of real estate transactions increased by 38%, reaching a total of 106,700 deals with a combined value of approximately SR127.3 billion ($33.9 billion). This growth is attributed to the government’s ambitious Vision 2030 strategy, which continues to drive substantial development across various sectors, including residential, commercial, and hospitality.
Residential Market Boom
The residential sector in Saudi Arabia saw remarkable growth in the first half of 2024. In Riyadh and Jeddah alone, 27,500 new residential units were delivered, marking a strong start to the year. This increase in supply was accompanied by a rise in residential prices, with Riyadh witnessing a 10% year-on-year increase in sale prices and a 9% rise in rents. Jeddah also experienced growth, albeit at a more moderate pace, with a 5% increase in sale prices and a 4% rise in rents.
The government’s efforts to boost home ownership and ongoing infrastructural developments have played a crucial role in this growth. Despite rising construction costs, the outlook for the residential market remains positive, driven by strong demand and supportive government policies. The Dammam Metropolitan Area (DMA), particularly Khobar, also saw residential development shifting inland, with stable sale prices and a 4% increase in rents.
The surge in residential property deals reflects the broader economic transformation underway in Saudi Arabia. By increasing the availability of housing and improving living standards, the government aims to create a more vibrant and sustainable urban environment.
Commercial and Hospitality Sector Growth
The commercial real estate sector also demonstrated robust performance in the first half of 2024. Riyadh added 52,000 square meters of new office space, bringing the total to 5.2 million square meters. The demand for high-quality office space, particularly in Riyadh’s northern region, pushed Grade A rents up by 19% year-on-year to SAR 2,090 per square meter per annum. Jeddah saw an 11% increase in rents to SAR 1,335 per square meter.
The hospitality sector posted impressive figures as well. Average Daily Rates (ADR) in Riyadh jumped by 25% in the year to June 2024, driven by an increase in corporate events. Kingdom-wide, occupancy rates increased by one percentage point, with ADR up by 7%, resulting in an 8% increase in revenue per available room (RevPAR). The Holy Cities of Makkah and Medina saw RevPAR increases of 4% and 15%, respectively.
Saudi Arabia’s ambitious plans to attract 150 million visitors by 2030, with substantial investments of $800 billion in tourism and infrastructure, ensure a positive long-term outlook for the hospitality sector. These developments are expected to further boost the real estate market, creating new opportunities for investors and developers.
Future Prospects and Challenges
Looking ahead, the real estate market in Saudi Arabia is poised for continued growth. The government’s Vision 2030 strategy, which aims to diversify the economy and reduce dependence on oil revenues, will continue to drive development across various sectors. The residential, commercial, and hospitality markets are expected to benefit from ongoing infrastructural projects and supportive policies.
However, challenges remain. Rising construction costs and the need for sustainable development practices are key concerns for the industry. Ensuring that new developments meet high environmental standards will be crucial for long-term success. Additionally, maintaining affordability and accessibility for residents will be essential to sustaining demand in the residential market.
In conclusion, the surge in property deals in the first half of 2024 highlights the dynamic and evolving nature of Saudi Arabia’s real estate market. With strong government support and a clear vision for the future, the market is well-positioned for continued growth and development.
