Saudi Arabia’s real estate price index (RPI) rose 0.9% in the fourth quarter of 2021 compared to the same quarter the previous year, while commercial real estate prices declined by 0.7% and agricultural realestate prices fell by 0.2%, according to the General Authority for Statistics (GASTAT).
Overall, residential real estate prices increased by 1.7% on an annual basis in the fourth quarter of last year, due to a 2% surge in the prices of plots of residential land. The RPI measures the relative change in real estate prices in the kingdom, based on a dataset of real estate transactions available to the Ministry of Justice.
“Commercial real estate prices decreased by 0.1%, mainly due to the decrease in commercial land plots prices by 0.1%. On the other hand, galleries prices increased by 0.4%, while both buildings and commercial centre prices were stable and did not register any significant changes,” GASTAT reported.
In addition, agricultural real estate prices remained flat in the fourth quarter of 2021, compared to the previous quarter.
A new housing survey by real estate advisory Knight Frank examined the preferences and appetite among Saudi nationals to rent, or purchase homes with a special focus on major smart city projects. The survey comes as USD 1 trillion worth of real estate infrastructure development projects are planned or under way in the kingdom, according to the real estate consultancy
A slew of major projects are already being constructed. These include the USD 500 billion NEOM smart city development, located on the north-western region of the country. Another is Amaala, also on the Red Sea coast, which will feature villas and luxury hotels. The Red Sea Project will be home to 35,000 residents, and tourism resorts across nine islands.
“Riyadh is poised to become entrenched as the commercial nerve centre for the kingdom, with more than 100,000 new homes expected by the end of 2023 and close to 3 million square metres of new office space in the works, along with over 12,000 hotel rooms, spread across mega projects worth an estimated USD 63 billion. As a result, the population of the capital is projected to exceed 15 million by 2030,” according to Knight Frank.
HOMEOWNERSHIP AMONG SAUDIS
The survey of 1,000 Saudis show a population eager to own property.
Among homeowners, the achievement of a lifelong goal (57%) is the primary reason for opting to purchase a home, with those in Jeddah (60%) citing this reason more frequently than those in Dammam (57%), or Riyadh (56%), the survey noted.
“Interestingly, those earning less than SAR 40,000 per month say this sense of achievement of owning their own home is far more important to them than it is for higher income brackets,” Knight Frank noted. “For those earning SAR 20,000-40,000 per month, for instance, this figure stood at 65%, compared to 50% for those on a monthly salary of SAR 40,000-60,000.”
Among tenants, apartments (48%) are more highly coveted as a first home when compared to villas (31%). Overall, 84% of tenants say they are ready to purchase a home in the next 12 months.
Amenities are also important to home buyers, with 48% keen to have a mosque nearby, 42% looking for supermarkets, 38% seeking panoramic views, and 37% looking for dedicated parking.
Most tenants (48%) have a budget of between SAR 750,000 and SAR 2.2 million for their first home purchase.
However, average two-bedroom apartments in Riyadh, of a good quality, sell for over SAR 750,000, while three- or four-bedroom villas usually sell in excess of SAR 2.3 million, highlighting the discrepancy between tenants’ ambitions and market realities, Knight Frank noted.
ATTRACTING MULTINATIONALS
The Saudi government’s goal to attract 500 multinationals to Riyadh city would also have a major positive impact on the housing and commercial real estate market.
The efforts are in addition to the new sponsorship system announced as part of the master plan to increase foreign talent. The regulatory reform is expected to encourage and attract foreign investment, following the relaxation of laws on foreign ownership, and setting up of businesses. All the initiatives are expected to positively impact demand for residential and commercial office spaces in the medium to long term
Contact SAB
