REAL ESTATE

Saudi Arabia’s real estate sector is expanding at a rapid pace as the population rises and more nationals seek to buy their own home.

Banks in the kingdom granted residential mortgages worth SAR 7.54 billion (USD 2 billion) to individuals in January 2024, marking an 11-month high, according to government data. The January figures represent a 21% increase or SAR 1.3 billion more than the loans oered the previous month. 

The ongoing development of infrastructure, coupled with foreign and domestic investments, continue to shape the real estate landscape in the country, addressing both current and future housing needs. 

The country is focusing on developing its housing sector to meet the growing demand driven by a young and expanding population. According to recent data by the Organisation for Economic Co-operation and Development (OECD), the population of Saudi Arabia is expected to exceed 39 million by 2030, intensifying the need for residential properties.

The government has been actively working to increase home ownership rates among Saudis, with a target of 70% by 2030. Initiatives such as the Sakani programme, which oers financial support and housing solutions to Saudi citizens, are part of this initiative.

Additionally, mega-projects like NEOM and the Red Sea Project are set to create new urban areas and residential communities, further boosting the real estate sector.

INDUSTRIAL AND LOGISTICS ZONES;

To expand the country’s real estate supply chain, the National Housing Company (NHC) signed 20 agreements with local and international firms to invest in industrial and logistics zones, aiming to secure supply chains in the building and construction sector. 

These agreements include partnerships with Al Zamil Industry, Trade and Transport Company, Bravat Mena, RAK Ceramics P.J.S.C, and several Chinese companies such as Zhejiang Tata Home Sale Co. Ltd, Zhejiang Jiashiyibao Board Co Ltd, and Wuhu COZY Residential Equipment Co. Ltd, to establish factories in the industrial city and provide logistics services.

NHC's goal is to attract investments from major foreign factories and localise them to ensure high-quality supply chains for its projects. This initiative benefits from Chinese expertise and integrates local factories into the supply chain. The agreements extend the strategic partnership with the Chinese CITIC Group to create an industrial city and logistics zones, securing construction materials, facilitating project handovers,and reducing construction costs for residential units. 

These agreements, signed at the Real Estate Supply Chains Forum 2024 in May, include collaborations with the Saudi Authority for Industrial Cities and Technology Zones (MODON) for creating an industrial city, the Watad platform for a virtual park, Masdar Company for equipment and building materials, Albawardi Company for steel supplies, and the Penny platform for automation and AI solutions. 

These memorandums of understanding (MoUs), implemented in partnership with the Chinese CITIC Group, aim to enhance project quality, improve local products, and create 10,000 job opportunities, thereby maximising the kingdom's economic and developmental impact. 

The memoranda also reflect NHC's eorts to secure supply chains and develop the sector by raising business standards and attracting top service providers in line with Vision 2030.

As the kingdom’s real estate developments ramp up, NHC aims to deliver over 300,000 housing units by 2025 across nine suburbs and six residential communities, accommodating over 1.5 million citizens.

REAL ESTATE INDEX UP IN Q1

In the first quarter of 2024, Saudi Arabia saw a 1.2% rise in residential real estate prices, primarily driven by a 1.2% increase in residential land prices. The residential sector's significant weight in the overall real estate index contributed to a noticeable impact on the general index.

Among residential properties, apartment prices rose by 0.8%, while prices for buildings, villas, and houses decreased by 0.2%, 2.3%, and 1.6%, respectively, according to the General Authority for Statistics. 

Overall, the General Real Estate Price Index increased by 0.3% in Q1 2024 compared to the previous quarter (Q4 2023). This quarterly rise was driven by a 0.4% increase in residential sector prices, with residential land prices also rising by 0.4%. Apartment prices saw a 0.7% increase, while prices for residential buildings, villas, and houses decreased by 0.2%, 0.4%, and 1.0%, respectively.

In the commercial sector, prices remained stable, with no significant changes except for a 0.3% decrease in commercial exhibition prices. Prices of commercial lands, buildings, and centres remained unchanged. The agricultural sector also stabilised, with no significant changes in prices during the first quarter of 2024.