Although Saudi Arabia’s residential property market has witnessed a decrease in buying activity, the expenses associated with home ownership in the Kingdom continue to climb.
In 2023, numerous residential markets across Saudi Arabia experienced declines in both transaction value and volume, notably in Riyadh, Jeddah, and Dammam. Collectively, these three markets accounted for 67,233 transactions valued at SAR 79 billion ($21 billion), marking a 15% decrease in value compared to 2022, as reported by Deloitte on Thursday.
Despite the overall slowdown in buying activity, sales prices and rental rates for villas and apartments have shown significant growth, particularly in Riyadh and Jeddah.
Villa sales in Riyadh surged by 5%, while apartment sales increased by 8%. Furthermore, amidst elevated interest rates, there has been a clear preference for affordable housing units in the Saudi market.
Notably, approximately 80% of apartments sold in Riyadh over the past year fell within the SAR 250,000 to SAR 1 million price range, targeting predominantly the low to mid-income segments of the market.
During an interaction with Zawya, Stefan Burch, Partner and Head of Real Estate at Deloitte Middle East, said, “The residential market’s demand has shifted to apartment stock as affordability continues to be a key driver amidst a backdrop of higher interest rates.”
Given that prices play a pivotal role for many buyers, specific locales offering affordable housing options, such as South Riyadh, have experienced a notable surge in interest from property investors.
The report said, “While North Riyadh has emerged as a prominent residential hub, South Riyadh has witnessed maximum growth in the share of transactions in the last five years, mainly due to the availability of affordable stock.”
The residential supply in Saudi Arabia’s primary markets continued to expand throughout the previous year, marked by the completion of new projects such as Al Majidiah 139 and Ajlan Riviera 37 in Riyadh, along with Itlalat Al Bahar and Al Wajiha in Dammam.
As of the fourth quarter of 2023, Riyadh boasted the highest residential supply, totalling 1.9 million units, followed by Jeddah with 1.1 million units and the Dammam Metropolitan Area (DMA) with 0.76 million units.