Saudi Arabia Real Estate Market Report - December 2024
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Key takeaways
Market Growth: The Saudi Arabian real estate sector concluded 2024 with robust growth, fueled by Vision 2030, economic diversification, and increased investment. The Saudi real estate market reached USD 413.9 billion, reflecting a 13.1% CAGR.
City-Wide Analysis: Riyadh led the market in activity and price growth, followed by Jeddah and Dammam, each with distinct market drivers related to infrastructure, tourism, and industry.
Residential Demand: Riyadh reported a 25% YoY increase in residential sales transactions.
Commercial Sector: Office rents in Riyadh increased by 7.5%, while Jeddah and DMA recorded steady growth in industrial and logistics spaces.
Rental and Mortgage Market: Residential rental prices increased by 12.5% YoY across major cities, contributing to the rising cost of living.
Comparative Analysis: December 2023 vs December 2024
Investment Opportunities: Foreign direct investment (FDI) in Saudi real estate rose by 17.2%, supported by regulatory reforms and international interest in Vision 2030 projects.
Market Overview
The graphs below show Saudi Arabia’s real estate market growing from $413.9 billion in 2024 to $1,250.8 billion by 2033, driven by urbanization and investment. Riyadh and Jeddah lead the residential sector with price increases of 10% and 5%, and rental growth of 9% and 4%, respectively.
City-Wide Analysis
Riyadh – The Economic and Residential Powerhouse
Riyadh continues to dominate Saudi Arabia’s real estate sector, supported by strong population growth, corporate expansions, and urbanization projects.
Residential Market:
Sales Transactions: A 25% YoY increase was recorded, driven by high demand for luxury and affordable housing.
Price Growth: Villas averaged SAR 5,808 per square meter, up 3.6% YoY. Apartment rents surged by 12.5%, reflecting strong tenant demand.
Key Drivers: Government housing programs under Vision 2030 and new developments such as Diriyah Gate.
Office Market:
Occupancy Rates: Nearly 100%, with continued demand from multinational corporations.
Rental Growth: Grade A office rents increased by 7.5% YoY.
Hospitality Market:
Tourism Growth: Occupancy rates reached 80% in December 2024, compared to 75% in 2023.
Luxury Hotels: Driven by major events and projects such as King Salman Park.
Jeddah – The Coastal and Tourism Hub
Jeddah’s real estate market has benefited from its strategic location and cultural significance.
Residential Market:
Sales Growth: A 22% YoY increase in transactions, with a focus on waterfront properties.
Rental Prices: Apartment rents rose by 10.4%, driven by demand in prime areas.
Key Projects: Jeddah Waterfront developments are revitalizing investor interest.
Commercial Market:
Rents: Office rents increased by 6.8%, particularly in the central business district.
Future Supply: Upcoming projects will add 250,000 square meters of office space by 2025.
Hospitality Market:
Occupancy Rates: Reached 78% in December 2024, supported by religious tourism and luxury hotel demand.
Development Projects: Jeddah Tower and nearby resorts are key contributors.
Dammam Metropolitan Area (DMA) – The Industrial and Logistics Core
DMA is emerging as a key player, leveraging its proximity to Jubail Industrial City and King Fahd International Airport.
Residential Market:
Transactions: A 28% YoY increase, driven by affordable housing developments.
Price Growth: Apartment prices rose by 4.7%, with sustained demand among middle-income buyers.
Commercial Market:
Rents: Increased by 5.2%, with industrial and logistics sectors contributing heavily.
Hospitality Market:
Business Travel: Occupancy rates reached 76%, bolstered by industrial events and trade shows.
Emerging Markets – NEOM and the Red Sea
Vision 2030 projects are creating new real estate and tourism hotspots.
NEOM:
Innovation: High-tech residential communities are attracting global investors.
Commercial Growth: Advanced infrastructure and futuristic cities like The Line are reshaping the region.
The Red Sea:
Eco-Friendly Tourism: Development of over 50 luxury resorts with 8,000 hotel rooms.
Residential Appeal: Offering sustainable living options in a pristine environment.
Mecca
As two of the holiest cities in Islam, Mecca and Medina play a vital role in Saudi Arabia’s real estate market.
Residential Market:
High demand for apartments and villas, especially from local and regional buyers.
Property prices in central Mecca increased by 8% YoY due to limited availability and proximity to the Grand Mosque.
Serviced apartments near Haram continue to attract short-term renters and investors seeking high yields.
Hospitality Sector:
Hotel occupancy reached 90% during peak pilgrimage seasons, contributing to an annual average increase of 12% in room rates.
Upcoming luxury hotels and serviced residences are expected to meet the growing demand from high-income pilgrims.
Commercial Real Estate:
Retail spaces near Haram recorded 100% occupancy rates, with rents increasing by 15% YoY due to strong consumer demand during Umrah and Hajj seasons.
Medina
Residential Market:
Residential property demand increased by 7% YoY, with prices rising modestly in key areas near the Prophet’s Mosque.
New housing developments are catering to middle-income families and religious visitors.
Hospitality Sector:
Hotel capacity is expanding to accommodate increasing numbers of pilgrims, with annual tourist arrivals projected to grow by 10% by 2025.
Luxury hotels in central Medina have reported a 20% increase in ADR over the past year.
Commercial Real Estate:
Retail rents near the Prophet’s Mosque rose by 10% YoY, with strong demand for spaces catering to pilgrims.
The development of mixed-use projects is integrating residential, retail, and hospitality components.
Outlook for Mecca and Medina
Expansion of pilgrim housing programs will further fuel demand for both residential and hospitality real estate.
Infrastructure developments, including high-speed rail and airport expansions, are expected to improve accessibility and boost property values.
Growing interest in mixed-use developments will attract investors seeking diversified portfolios.
Rental and Mortgage Analysis
Rental Market Overview
In 2024, Saudi Arabia’s rental market experienced significant growth, with residential rents rising notably across major cities. This trend was primarily driven by increased demand from expatriates and young professionals, coupled with a limited supply of quality apartments.
Riyadh
Rental Growth: Average residential rents increased by 9% year-on-year (YoY) in the first half of 2024.
Market Dynamics: High occupancy rates and a shortage of premium apartments contributed to upward pressure on rents.
Jeddah
Rental Growth: Residential rents rose by 4% YoY in the first half of 2024.
Market Dynamics: The demand for waterfront properties and modern amenities fueled rental increases.
Dammam Metropolitan Area (DMA)
Rental Growth: While specific figures are limited, the DMA followed the national trend of rising rents due to increased demand and limited supply.
Key Factors Influencing the Rental Market:
Supply Constraints: A limited availability of quality apartments led to long waitlists and increased competition among tenants.
Inflation Impact: The rise in housing rents significantly contributed to the overall inflation rate, which reached 2% in November 2024.
Expatriate Demand: The influx of expatriates seeking urban living accommodations further strained the rental market, particularly in major cities.
Residential Market Overview
Sales Transactions:
Riyadh experienced a 25% YoY increase, with a surge in demand for luxury apartments and villas.
Jeddah saw a 22% YoY increase, with waterfront developments driving sales.
DMA recorded a 28% YoY increase, with affordable housing dominating transactions.
Average Residential Prices:
Villas in Riyadh averaged SAR 5,808 per square meter, reflecting a 3.6% YoY increase.
Apartments in Jeddah saw prices rise by 4.7% YoY, reaching SAR 4,200 per square meter in prime areas.
Affordable housing developments in DMA maintained steady growth, with average apartment prices rising by 4.2% YoY.
Key Drivers:
Rapid urbanization and population growth.
Rising investor confidence in Vision 2030 projects.
Expanding infrastructure, such as Riyadh Metro and new residential developments.
Mortgage Market Overview
The Saudi mortgage market witnessed continued growth in 2024, reflecting the Kingdom’s push to increase homeownership through affordable financing.
Growth in Lending:
Mortgage lending increased by 15% YoY, driven by government subsidies and low-interest housing loans.
Over 60% of new residential purchases were financed through mortgages.
Interest Rates:
Fixed-rate mortgages averaged 4.5%-5.5%, while variable-rate mortgages ranged between 4.0%-4.8%.
Government Initiatives:
The Sakani program provided housing support to over 225,000 families in 2024.
Low-interest loans and subsidized financing for middle-income households boosted demand.
Emerging Trends:
Younger buyers are driving demand for mortgage-backed purchases, particularly for mid-range apartments.
Banks are offering innovative financing solutions to cater to the growing market.
December 2023 vs. December 2024
Investment Trends in Saudi Real Estate
Domestic and Foreign Investments
Foreign direct investment (FDI) in Saudi Arabia’s real estate sector increased by 17.2% YoY.
Vision 2030 reforms, such as allowing full foreign ownership and tax incentives, have boosted international interest.
Key Areas of Investment Interest
1. Residential Properties:
High rental yields (5%-7% annually in Riyadh and Jeddah) continue to attract investors.
Luxury apartments and villas near Vision 2030 mega projects are in high demand.
2. Commercial Spaces:
Office properties in Riyadh offer attractive yields of 6.5%-8%, driven by limited supply and high demand.
Industrial real estate near DMA is gaining attention due to logistics and warehousing needs.
3. Hospitality:
The booming tourism sector has made hotels and serviced apartments a lucrative investment, with ADR rising by 26.8% YoY in Riyadh.
Emerging Regions for Investment
NEOM: Offering futuristic residential and commercial opportunities, NEOM is attracting high-value investments globally.
Red Sea Project: Eco-tourism and luxury hospitality investments continue to grow, with more than 50 resorts planned by 2026.
Future Outlook
Vision 2030 projects like NEOM and the Red Sea Development will continue to attract both domestic and international investments.
Riyadh’s central position in business expansion suggests sustained demand for residential and commercial properties.
Tourism is projected to grow by 20% in 2025, boosting demand for hospitality properties across major cities.
Sources
Dimension Market Research: The Kingdom of Saudi Arabia (KSA) Real Estate Market
JLL MENA: Kingdom of Saudi Arabia Living Market Dynamics, Q3 2024
Disclaimer: This report is for research and educational purposes only and does not constitute financial or investment advice. Readers should perform independent due diligence and consult financial advisors before making investment decisions.
