REAL ESTATE

RISING HOME OWNERSHIP PROPS UP SAUDI REAL ESTATE MARKET

The percentage of Saudi households owning their homes reached 63.74% by the end of 2023, marking a 16.7 percentage point increase since 2016 and surpassing the 2023 target of 63%. In 2023 alone, over 96,000 eligible families received housing support, with more than 20,000 benefiting from developmental housing initiatives, according to the annual report of the country’s Housing Program.

The report highlighted key performance metrics, strategic goals, and the programme's contributions to the economy, particularly its support for non-oil GDP growth, and its alignment with Vision 2030 objectives.

The Housing Program also reported that over 26,000 land contracts were signed through the Ministry of Municipal and Rural Affairs and Housing, with 11,000 of these agreements finalised in the fourth quarter of 2023. These efforts aim to improve housing affordability and enable more Saudi families to secure appropriate homes.

In addition to land contracts, the programme oversaw the completion of over 800 development plans, issued more than 3,000 building permits, and provided 10,000 housing units for beneficiaries of developmental housing. The number of contracts signed for o-plan sales reached 10,904.

MAKING HOME OWNERSHIP POSSIBLE

The report further detailed the range of housing services provided, including access to real estate consultants, issuance of real estate transfer tax certificates, display of financing institutions' rates, electronic land contract issuance, engineering design services, and electronic financing options. It also highlighted the introduction of the Real Estate Market platform, along with streamlined processes for immediate registration, eligibility determination, and electronic building permit issuance. 

The strategy review within the report emphasised the rapid pace of homeownership as a measure of success, continuous sector improvement, and the impact of global economic shifts on the real estate market. It also considered the kingdom's financial climate and its influence on the purchasing power and investment capabilities of citizens and investors in the housing sector.

The programme's achievements in launching initiatives and development projects that meet the Saudi housing market’s needs were documented, alongside eorts to create job and investment opportunities. The report noted the attraction of developers and private sector partners to address housing requirements across various regions.

The programme also expanded housing options for citizens by offering diverse, aordable housing products and facilitating access to mortgage financing tailored to dierent segments. The latest figures confirmed the programme has exceeded its targets set for the year, contributing to the growth of the housing sector by enhancing services and enabling more Saudi families to own their first homes.

The Housing Program remains focused on empowering Saudi families to achieve homeownership through various housing and financing solutions, reducing waiting lists, and ensuring suitable housing opportunities are accessible across the country.

CHINESE PARTNERSHIP

To boost housing stock, the National Housing Company (NHC) signed an agreement with China State Construction Engineering Corporation (CSCEC) to build 20,000 housing units across various regions in Saudi Arabia. The partnership is part of NHC’s broader strategy to collaborate with leading global construction companies to develop high-quality housing projects. 

The planned 20,000 units will feature a range of sizes and designs, incorporating health, educational, commercial, and public service facilities to ensure a high standard of living.

The agreement is integral to NHC's objective to deliver over 300,000 housing units by 2025, with a total value exceeding a quarter of a trillion riyals, catering to all segments of society.

This partnership extends the Saudi-Chinese collaboration, following a series of agreements signed during the recent visit to China of Majed bin Abdullah Al-Hogail, minister of municipal rural aairs and housing. Among these was an agreement with CSCEC to establish an industrial and logistics city for building materials to secure supply chains for NHC's projects, as well as an agreement with China Machinery Engineering Corporation (CMEC) to build an additional 20,000 housing units across the kingdom. These initiatives are expected to significantly bolster the development of Saudi Arabia's real estate sector.

REAL ESTATE ACTIVITY

The Real Estate Price Index (RPI) recorded a 1.7% increase in the second quarter of 2024 compared to the same period last year, according to the General Authority for Statistics (GASTAT). This growth was largely driven by a 2.8% rise in residential property prices.

The report highlighted a 2.8% year-on-year increase in residential land plot prices, which played a significant role in the overall uptick in real estate prices. Within the residential sector, apartment prices rose by 2.9%, while prices for residential buildings, villas, and houses saw declines of 0.1%, 0.5%, and 1.4%, respectively.

In contrast, the commercial sector experienced a 0.4% decrease in real estate prices, attributed to a 0.4% drop in commercial land plot prices and a 0.6% decline in commercial gallery prices. Prices for commercial buildings and centres remained stable, showing no notable changes during the second quarter of 2024.

Meanwhile, the agricultural sector saw a 1.5% increase, driven by a corresponding rise in agricultural land prices.