Saudi Residential Market Trends: Riyadh’s Resilience despite General Decline in 2023
2 min
The Saudi Arabia’s residential real estate transactions, representing 58.7% of the total real estate transaction value, witnessed a 16% decrease, falling to just below 150,000 sales from January to November 2023.
Throughout 2023, the total real estate transactions across all sectors in Saudi Arabia dropped by 17%, reaching slightly over 177,000, with the aggregate deal value decreasing by 9% to SAR 197.7 billion.
The issuance of mortgages during January-November 2023 saw a 35% reduction, a sharper decline compared to the 22% decrease during the same timeframe in the previous year. Additionally, the total mortgage value dropped by 36% to SAR74.2 billion, as elevated interest rates and prices led potential buyers to delay purchases in favor of saving larger down payments.
Contrarily, Riyadh, the capital of Saudi Arabia, displayed resilience against the downturn.
Riyadh saw an ascending trend in home values, with apartment prices increasing by 4.5% and villa prices by 0.5% compared to the previous year. The city also experienced a 7% increase in transaction volumes, totally contrasting with a 21% decrease in Jeddah and a 12% fall in the Dammam Metropolitan Area.
The price significantly grew in the residential market over recent years, especially in Riyadh, which has led to increased affordability challenges, worsened by rising borrowing costs. Interest rates escalated from approximately 0.8% in January 2021 to 6% by the end of the year.
Experts noted a shift in demand dynamics, with younger Saudis postponing homeownership due to affordability and a preference among intra-Saudi migrants for renting over buying, presenting a significant opportunity for introducing build-to-rent properties managed to international standards.
Analysis also pointed to a decline in Jeddah’s residential market transactions, with a 21% decrease from the previous year, and a 26% reduction in transaction value, ending 2023 at SAR20.9 billion.
Jeddah’s rising interest rates are the primary cause for the dip in transactions, affecting transaction values kingdom-wide. However, the government’s focus on revitalizing Jeddah’s demand through significant real estate and infrastructure projects promises potential upliftment in job creation and housing demand in the foreseeable future.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Villa prices saw particularly strong growth, with capital values increasing by 33.4 percent year-on-year
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Dubai’s real estate market showed strong performance in the second quarter of 2024, with notable increases across the residential, office, and retail sectors, according to a new ValuStrat real estate report for Q2 2024.
Villa prices experienced particularly strong growth, with capital values rising by 33.4 percent year-on-year.
Haider Tuaima, Director and Head of Real Estate Research at ValuStrat said: “The Dubai real estate market has shown impressive growth and resilience in recent months. The ValuStrat Price Index for Residential Capital Values increased by 6.4 percent quarterly and 28.2 percent annually, reaching 178.2 points.
“Despite severe flooding caused by record rainfalls in April, the quick and effective response from developers and authorities helped to control the damage, ensuring that market activity and property valuations remained robust in the subsequent months.”
The office sector also performed well, with the VPI for office capital values surging by 31.7 percent annually and 9.4 percent quarterly, reaching 212.5 points—the highest quarterly increase in a decade.
In the retail sector, Emaar Properties reported 98 percent occupancy in their prime mall assets, while overall mall occupancy stood at 96 percent during the first quarter of 2024. The hospitality sector also saw growth, with total international guests reaching 8.12 million as of May 2024, a 9.9 percent increase compared to the same period last year. Hotel occupancy reached 81 percent, rising by 1.4 percent year-on-year.
Despite these positive indicators, Tuaima added, “The decline in transaction volumes calls for a closer examination of market dynamics as stakeholders navigate this evolving landscape.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
