Saudi Arabia Real Estate Market Report - January 2025

Key Takeaways

• Market Growth: The Saudi real estate market continues its growth trajectory, with a 2.6% increase in the Real Estate Price Index (REPI) year-on-year (YoY) from January 2024 to January 2025.

• Residential Sector: The market remains strong, driven by high demand for housing, government-backed housing projects, and increased foreign investment. Residential property prices rose by 1.6% YoY.

• Commercial Sector: A significant 6.4% increase in commercial real estate prices, fueled by foreign investments and corporate expansions, particularly in Riyadh and Jeddah.

• Foreign Investment: The Saudi government has opened real estate investments in Mecca and Medina to foreign investors, leading to increased demand in these religious cities.

• Infrastructure Developments: Major projects such as NEOM, The Line, and King Salman Park are shaping future real estate trends.

• Rental Market: Rental prices have surged in major cities due to population growth and increasing urbanization. Riyadh recorded a 9% increase in rental prices in 2024.

Market Overview

The Saudi Arabian real estate market continues to expand as a result of Vision 2030, economic diversification, and regulatory reforms aimed at increasing foreign investment. As of January 2025, the market has demonstrated stability and resilience, driven by strong demand in both residential and commercial segments.

Key Drivers of Market Growth

1. Vision 2030 and Government Initiatives

The Saudi government has prioritized real estate development as part of its Vision 2030 strategy, with a focus on increasing homeownership, expanding commercial real estate, and boosting infrastructure projects.

• The Sakani Program, which provides financial support for Saudi families purchasing homes, has contributed to increased residential real estate demand.

• Mega-projects such as NEOM, Qiddiya, and Red Sea Global are attracting foreign and domestic investors, creating new real estate investment opportunities.

• Regulatory reforms, such as allowing foreign investors to own real estate in Mecca and Medina, are expected to further stimulate the market.

2. Population Growth and Urbanization

• Saudi Arabia’s population reached 37.5 million in 2024, growing at 2.1% annually.

• Urban migration has increased demand for residential and commercial properties in Riyadh, Jeddah, and Dammam.

3. Foreign Investment and REITs

• The relaxation of foreign ownership laws has attracted $3.2 billion in foreign real estate investments in 2024.

• Saudi Arabia’s Real Estate Investment Trusts (REITs) market has grown significantly, with total assets under management (AUM) exceeding SAR 25 billion.

City-Wide Market Analysis

Riyadh: The Business and Investment Hub

Riyadh remains Saudi Arabia’s top-performing real estate market, attracting local and foreign investors due to its status as the financial and business capital.

Key Highlights:

• Commercial property prices increased by 12% YoY, driven by corporate expansions.

• Residential property demand surged, with apartment prices rising by 4.5% and villa prices by 3.2%.

• Office space occupancy rates reached 92%, making Riyadh a hotspot for commercial real estate investment.

• Rental prices saw a 9% increase, with average apartment rents rising from SAR 48,000 to SAR 52,320 per year.

Investment Opportunities:

• Luxury apartments in King Abdullah Financial District (KAFD) are in high demand, with rental yields reaching 7-8% annually.

• Retail spaces in major shopping districts saw 5% rental growth due to increased foot traffic.

Jeddah: The Red Sea’s Rising Market

Jeddah’s real estate market has been bolstered by infrastructure projects and growing demand for high-end coastal properties.

Key Highlights:

• Residential property prices increased by 3.5% YoY, with demand highest for waterfront apartments and villas.

• Commercial sector growth was 8.2%, fueled by the expansion of tourism and retail projects.

• Hotel occupancy averaged 76%, supported by religious tourism and corporate travel.

• Rental prices increased by 7%, with prime apartments in the Corniche area reaching SAR 45,000 per year.

Investment Opportunities:

• Jeddah Economic City, home to the upcoming Jeddah Tower, is attracting luxury real estate investors.

• Waterfront properties in the Corniche area continue to be a preferred investment, offering 5-6% annual rental yields.

Mecca & Medina: Religious Tourism Growth

These two cities have seen exceptional demand due to government reforms allowing foreign ownership.

Key Highlights:

• Religious tourism real estate market expanded by 9%, with hotel prices increasing by 6% YoY.

• Commercial real estate rents in prime locations near the Grand Mosque and Prophet’s Mosque increased by 10%.

• Luxury serviced apartments and hotel rooms are being developed to meet the rising number of Umrah and Hajj pilgrims.

Investment Opportunities:

• Short-term rental properties near the holy sites offer high yields (8-10% annually) due to year-round demand.

• Hotel developments near the Masjid al-Haram and Masjid al-Nabawi are attracting investors seeking long-term appreciation.

Dammam & Khobar: The Industrial and Logistics Hotspots

These cities in the Eastern Province are emerging as key industrial and logistics hubs, benefiting from Saudi Arabia’s growing non-oil economy.

Key Highlights:

• Warehouse rents increased by 15% due to high demand from logistics companies.

• Residential property prices in Dammam rose by 2.8%, supported by population growth.

• Commercial office space in Khobar recorded a 5.2% increase in lease prices, driven by demand from oil, gas, and technology firms.

Investment Opportunities:

• Industrial real estate is an attractive asset class, with rental yields reaching 9%.

• Logistics parks near King Abdulaziz Port are seeing increased foreign investment from global supply chain firms.

Real Estate Market Trends: January 2024 vs. January 2025

Investment and Realtor Insights

For Investors:

• Mecca and Medina are high-yield destinations due to government-backed religious tourism growth.

• Riyadh’s office space market is experiencing a boom in corporate leasing, making it a prime sector for commercial investors.

• Jeddah’s waterfront projects are offering strong capital appreciation and rental income opportunities.

For Realtors:

• Luxury real estate is a key market, with high demand for high-end apartments and villas in Riyadh, Jeddah, and the Red Sea region.

• Short-term rentals in Mecca and Medina continue to be a profitable segment, particularly for investors targeting religious tourism.

• Smart homes and PropTech (property technology) are increasingly shaping buyer preferences, making digital marketing and virtual tours essential for realtors.

Conclusion

The Saudi real estate market remains resilient and attractive in January 2025, with major cities showing sustained growth across all sectors. Vision 2030 reforms, foreign ownership policies, and infrastructure investments continue to drive the market forward. Commercial properties, high-end residential units, and logistics real estate remain the strongest investment options in 2025.

Sources

General Authority for Statistics (GASTAT) – Real Estate Price Index (gastat.gov.sa)

Arab News – Saudi Arabia’s Real Estate Market Trends (arabnews.com)

Saudi Central Bank (SAMA) – Mortgage and Loan Reports (sama.gov.sa)

Trading Economics – Saudi Housing Index (tradingeconomics.com)

Reuters – Saudi Foreign Investment Updates (reuters.com)

Disclaimer

This report is for educational and research purposes only. It does not constitute investment advice. Readers should conduct their own due diligence and consult financial advisors before making investment decisions.