An expected boom in the Saudi real estate market with the support of financing initiatives
In its report issued today, Sunday, the agency indicated a noticeable increase in housing prices throughout the Kingdom, due to the increase in demand and financing support, as the value of new real estate financing issued by Saudi banks increased by 17% to 91 billion riyals in 2024.
Real estate financing
Real estate loans acquired 23% of the total loans granted to the Saudis by the end of 2024, while Standard & Poor’s expects the growth of this percentage after the Central Bank of interest rates was reduced by 100 basis points, which means that real estate financing has become the preferred destination for buyers and real estate investors.
The report indicated that one of the initiatives such as the Saudi Housing Endurance Services Initiative (guarantees) also contributed to the growth of real estate financing as a result of Saudi citizens ’demand for it, and it is expected that the funds will grow more with the expansion of the projects presented.
The total residential supply in Riyadh, Jeddah, Dammam, the Holy Capital and Medina reached about 3.5 million housing units in 2024.
And based on the analysis of “Knight Frank”, this number is expected to reach approximately 3.9 million units by the end of 2028, which reflects the continuous Saudi efforts to provide housing for citizens.
Government efforts
The report noted the role of Vision 2030 in the growth of the real estate sector, noting that the vision aims to reach the ownership of housing to 70% by 2030, and this target reached 65.4% in 2024. In addition to providing lands for housing at reasonable prices to control prices and facilitate ownership.
He also pointed to the reforms of the 2024 real estate ownership law, which included many improvements such as the warranty account, unifying the provisions of the agreements, and enhancing governance and transparency to enhance investor confidence.
He stated that fees are imposed on uncontrolled lands, which may stimulate development activities, stressing that these rapid changes provide developers and investors a supportive environment to change the scene in the residential real estate market in Saudi Arabia.
Housing preferences
The report indicated that the high costs of owning housing will lead to an acceleration in changing consumer preferences, but nevertheless will provide an opportunity to transform the sector.
He pointed out that housing in apartments instead of villas and independent homes has become more popular among the Saudis, while buyers have become more inclined to buy homes through real estate financing instead of ready houses for housing.
Global tensions
The report pointed out that despite the global trade tensions currently witnessing the world, the high risk rate, and the high inflation and slowdown in economic growth, the growth of the population of Saudi Arabia, the activity related to the Kingdom’s 2030 vision, and the lack of supply in major urban centers will continue to feed the market.
Residential transactions
“Standard & Poor’s” expected a strong increase in the size and values of housing transactions in Saudi Arabia this year, as housing transactions increased by 38% to exceed 200 thousand transactions, and the value of housing transactions increased by 35% to 164.8 billion riyals in 2024.
It is expected, according to the report, that this momentum will increase in light of government initiatives aimed at raising housing ownership, and strong demand in major centers such as Riyadh and Jeddah thanks to the growth of economic activity, and Mecca and Medina coinciding with the high number of visitors to the holy sites. It is also possible that the distinguished residence visa program for non -Saudis will gradually recover in 2025.
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