SAUDI HOUSE PRICES MAKE A STRONG SHOWING IN Q2 2022
Saudi Arabia’s Real Estate Price Index (RPI) rose 0.7% in the second quarter of 2022, compared to the same quarter last year, mainly due to an increase in residential real estate prices of 1.9%. The decline in commercial real estate prices by 1.5%, and agricultural real estate prices by 0.6% had a dampening effect on the general index.
“Residential real estate prices increased by 1.9% on an annual basis in the second quarter of 2022, affected by the increase in residential land plots prices by 2.0%, which contributed to the rise in the general index, due to its high relative importance in the index,” according to the General Authority for Statistics (GASTAT).
“Among other residential real estate prices, the prices of villas, apartments and houses decreased by 1.1%, 1.1% and 0.9%, respectively. However, the prices of buildings stabilised and did not record any significant change,” according to GASTAT.
Meanwhile, commercial real estate prices fell 1.5%, on the back of falling prices of commercial land plots, and galleries by 1.5% and 1.1%, respectively. Still, prices of commercial centres rose 0.1%, while building prices did not record any significant changes.
Prices of villas and apartments rose by 3.1% and 1.2%, respectively. “Prices for houses decreased by 0.1% and the residential buildings prices stabilised and did not record any significant change relatively,” according to the report.
In addition, agricultural real estate prices fell 0.1% due to a decline in agricultural land prices by 0.1%.
NEW HOUSING STOCK
The kingdom’s key cities are expected to see new residential units. Riyadh will have 16,000 new residential units in the second half of the year, Jeddah is expecting 9,000 new units coming on line, the Dammam Metropolitan Area will witness 10,000 new residential units, and 5,000 new residential units will come on stream in Makkah, according to Jones Lang LaSalle, a real estate consultancy.
“In-line with the Iskan Program to increase homeownership for families to 70% by 2030, the government recently began work on the second phase of the Idle Lands Program across Makkah, Jeddah and Dammam,” JLL noted. “With an aim to develop infrastructure for housing, this phase focuses on land plots located within neighbourhoods, and sized over 10,000 metres. The objective of the programme is to encourage landowners to develop properties in order to increase residential supply in the market.”
The capital city has seen surging interest from companies looking to expand their economic activities by hiring new workers. There are also efforts by the government to transform the city into one of the 10 largest in the world by 2030 with a population of 15 million.
“Recently, locations in close proximity to commercial areas have been experiencing strong growth in demand as Riyadh continues to attract global talent. However, the residential market currently has a shortage of developments which, for example, provide flexible work options for residents,” JLL said. These typically attract persons working within start-ups or freelancers who want to live in projects where they can “live, work, and play” with other like-minded individuals.
NEW REGISTRATION SERVICE
The Public Investment Fund (PIF) launched the National Real Estate Registration Services Company (RER) to digitise and develop the local real estate sector through a comprehensive digital platform, in collaboration with the Real Estate General Authority and other government entities.
The RER aims to develop a digital platform to build a comprehensive real estate registration database covering all data of units of property in Saudi Arabia. The company will also provide property registration services according to best-in-field practices.
“The National Real Estate Registration Services Company also aims to improve the quality of services and access for beneficiaries by developing procedures and mechanisms for registration,” the PIF said. The digital real estate registration database will include public, commercial, residential, and agricultural units and their geolocation data, as well as promote transparency in real estate services and transactions.
“The new company’s use of advanced digital solutions in its operations, enabling it to link its platform to all relevant government entities, will enhance reliability and transparency in real estate services and data in Saudi Arabia,” according to Raid Ismail, co-head of MENA Direct Investments at PIF. “This in turn will increase the attractiveness of the investment ecosystem, and grow the value of national real estate assets.
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