Saudi Arabia’s housing market is experiencing a surge in demand, with the capital Riyadh witnessing a particularly strong performance. According to a report by CBRE, a global consultancy firm, residential property sales in Riyadh skyrocketed by 77% in the first quarter of 2024 compared to the same period last year. This significant growth indicates a thriving residential market in the Saudi capital.
The report further highlights that other Saudi cities are also experiencing a positive trend in residential sales. Jeddah, the country’s second-largest city, saw a remarkable 92. 9% increase in residential property transactions during the first three months of this year. Dammam, a major commercial and industrial center in eastern Saudi Arabia, also witnessed a substantial rise, with residential sales rising by 28% year-on-year.
While sales figures are impressive, apartment prices across the three major cities varied. The report states that apartment prices in Riyadh, Dammam, and Khobar increased by 8. 4%, 0. 9%, and 0. 4%, respectively, compared to the previous year. Jeddah, however, showed a slight dip in average apartment prices, with a decrease of 1. 1% over the same period.
The report also sheds light on the office sector, revealing a slowdown in rental growth across all segments. However, prime office rents in Riyadh’s occupier market exhibited a positive trend, surging by 14. 5%. Grade A and Grade B office rents in the capital city also rose, with increases of 11. 8% and 10. 3%, respectively.
The robust growth in Riyadh’s residential market can be attributed to several factors. The Saudi government’s Vision 2030 economic diversification plan has spurred infrastructure development projects and created new job opportunities in the capital, leading to increased demand for housing. Additionally, government initiatives aimed at facilitating homeownership, such as subsidized mortgage programs, have made it easier for residents to enter the property market.
The thriving residential market in Riyadh is a positive indicator for the Saudi economy. It suggests growing confidence among consumers and a corresponding rise in disposable income. This trend is likely to continue as the government implements further economic reforms and diversifies the economy away from its reliance on oil.
However, some analysts caution that the rapid rise in residential property sales could lead to a price bubble in the long run. They emphasize the need for sustainable growth in the sector to ensure its stability.
