- Despite a 15% decrease in residential property transactions, Saudi Arabia saw a continued escalation in home prices in 2023, especially in Riyadh and Jeddah.
- Affordability became a critical factor influencing buyer preferences, with 80% of apartments sold in Riyadh falling within the SAR 250,000 to SAR 1 million price range.
- The residential supply in key Saudi markets increased, with Riyadh leading in new projects, indicating the market’s adaptability to changing consumer demands and economic conditions.
In a recent report by Deloitte, it has been revealed that while Saudi Arabia experienced a notable 15% decrease in residential property transactions in 2023, the cost of owning homes in the kingdom continued to escalate. Despite the slowdown in buying activity, the real estate market witnessed significant price growth, particularly in key cities like Riyadh and Jeddah.
According to the report, Riyadh, Jeddah, and Dammam recorded 67,233 property transactions amounting to SAR 79 billion ($21 billion) in 2023, marking a decline from the previous year. However, this dip in transaction volume did not deter the upward trajectory of sales prices and rents for villas and apartments, with Riyadh witnessing a 5% increase in villa sales rates and an 8% rise in apartment sales rates.
Affordability emerged as a crucial factor influencing buyer preferences, with around 80% of apartments sold in Riyadh falling within the SAR 250,000 to SAR 1 million price range. This trend indicates a shift towards more budget-friendly options, particularly amidst higher interest rates.
Stefan Burch, Partner and Head of Real Estate at Deloitte Middle East highlighted the significance of affordability in driving market demand, particularly in the context of rising interest rates. The report also noted a surge in property investments in destinations offering affordable housing options, such as South Riyadh, which has experienced substantial transaction growth over the past five years.
In terms of residential supply, Saudi Arabia’s key markets witnessed an increase in new projects, with notable developments in Riyadh and Dammam. Riyadh, boasting the highest residential supply, saw the delivery of new projects like Al Majidiah 139 and Ajlan Riviera 37, while Dammam welcomed Itlalat Al Bahar and Al Wajiha.
With Riyadh leading in residential supply, followed by Jeddah and Dammam, the Saudi property market continues to evolve, adapting to changing consumer preferences and economic dynamics.
The findings of Deloitte’s report shed light on the nuanced trends shaping Saudi Arabia’s residential property market, emphasizing the resilience of prices despite a decline in transaction volume. As affordability remains a key consideration for buyers, the market is expected to witness further shifts in the coming years, driven by factors such as interest rates and supply dynamics.
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Last Updated on February 23, 2024 by Safiya K
