The Saudi real estate industry is witnessing a boost in global investor confidence due to the Kingdom’s forward-looking “Vision 2030” economic diversification strategy and billions of dollars’ worth of mega infrastructure spending. In its new report, PwC Middle East has now found that the nation is making the move of a lifetime with more than USD 1 trillion allocated to real estate and associated infrastructure projects. This investment tide is focused on flagship giga-projects like NEOM, The Line, and the Red Sea Project—projects aimed to promote urban innovation, environmental sustainability, and economic diversification.
The report highlights how these ambitious plans are altering attitudes towards Saudi Arabia’s real estate market. Riyadh, for example, is fast becoming a model for intelligent urban planning, with over 1,200 infrastructure projects in the pipeline. From residential and sanitation to clean energy mass transit systems, the capital is being reimagined for long-term liveability.
A striking increase in homeownership, rising from 47% in 2018 to 60% in 2022, suggests the widening availability of the housing market. This is coupled with policy reforms, subsidised housing programmes, and greater private sector participation. The real estate market is also adapting itself to ESG (Environmental, Social, and Governance) standards, attracting global investors who are increasingly concerned with sustainability and ethical development strategies.
Property values also have registered a healthy increase, with villa values seeing especially strong growth, indicating strong demand in the residential sector. Commercial property is also following suit, helped along by better investor sentiment and increased transparency of regulations.
However, analysts are still seeing red here: the property market is recording a decline in the total value of transactions and the average price per square metre during the first half of 2025, despite the increase in the transacted area.
Decoding the Real Estate Exchange data under the Ministry of Justice, it was found that about 216,000 transactions were registered in the first six months of the year, with a combined value exceeding USD 44.5 billion (SAR167 billion). This marked a decline of 17.3% compared to the same period in 2024, when transaction values reached USD 53.9 billion (SAR202 billion).
However, the total transacted area surged to approximately two billion square metres, a significant rise over the 1.3 billion square metres recorded in the first half of the previous year. Meanwhile, the average price per square metre fell by 13%, reaching SAR2,216 compared to about SAR2,570 a year earlier.
Analysts attributed this drop to a combination of factors like a clear shift in investor behaviour from speculative, short-term trading in high-value urban areas toward broader activity in suburban and emerging development zones, such as east and south Riyadh and north Jeddah. These areas generally offer lower land prices and greater potential for long-term projects.
The introduction of white land fees (annual tax imposed on undeveloped, privately owned land within designated urban areas) has also played a role, prompting landowners to accelerate sales to avoid escalating levies, which increased the volume of supply. Also, higher financing costs resulting from rising interest rates have constrained the borrowing power of families and investors. Heightened competition among developers has further contributed to price adjustments, as companies have introduced attractive pricing and flexible financing solutions to boost home ownership and reduce inventory levels.
Analysts anticipate that the market will stabilise over the next six months. Al-Zahrani expects a modest decline in prices of 2–4% in areas with abundant supply and weaker demand, alongside a potential increase in transaction values of 3–5% if major national projects, such as new residential districts and special economic zones, are launched or if innovative financing products are introduced.