Residential apartments in Saudi Arabia .. higher prices and lower demand

Saudi Arabia faces increasing challenges in the residential real estate market, as high prices and high borrowing costs have led to a decline in housing demand, according to real estate consulting company “Knight Frank”. The company said, based on a survey, among others, more than a thousand families, that the percentage of buyers for the first time a home wants to buy has dropped to 29% from 40% in 2023. Many home buyers believe that prices are very high, and that they need more time to save, and that they want more diverse financing options, according to the “Knight Frank” report on Saudi Arabia in 2025. 2024, according to the research business. Saudi Arabia encourages ownership. Saudi Arabia has invested a lot in the construction of housing over the past few years as part of its effort to accommodate the growing population growth and raising property ownership figures to 70%. The company “Knight Frank” has estimated that the Kingdom must build 115,000 homes over the next six years to meet demand, but he warned that the market offer did not coincide with the real expectations of buyers. “The essence of the issue lies in the incompatibility between the expectations of buyers and the current prices or reality in the market,” said Faisal Duraani, head of Middle East Research Division at Knight Frank, during an interview in the kingdom. The prices of Saudi apartments have the ability to give costs a major concern, as the budgets of low and medium income people do not cover the average house prices, according to the company. People with high income may withstand new house prices, but according to the company, this group of Saudi population remains relatively small. The list of developers contributing to raising the “Rosen Group” offer, supported by the Saudi public investment fund and “Dar Global”, which recently announced plans to build new luxury projects in collaboration with Trump in Riyadh. It was dedicated to the company “NHC” (formerly national housing), (which represents the executive and investment arm of the Saudi Ministry of Housing), the task of building real estate at more appropriate prices. The luxury Saudi housing said: “There is a real danger in excess of the supply of luxury housing in the kingdom over the next five years, unless new sources of demand identified or attract, and especially the demand of international buyers.” ‘Knight Frank’ expects the expected change in laws that foreigners should pave the way for the flow of investments from abroad in some new luxury homes in the Kingdom of Saudi Arabia. Foreigners currently have saudi -solid property, and foreigners can get a long -term home in Saudi Arabia by investing 4 million Riyals ($ 1.1 million) in real estate. The recent mitigation of the rules associated with foreign real estate investment in the two sacred cities, Makkah and Medina, has so far been the strongest signal to the possibility of more facilitation in the future, according to Durani. Knight Frank said although the two cities have attracted great attention regarding property ownership, the capital Riyadh remains the most prestigious destination to live in the kingdom. But it was also the fastest rate for price growth. The cost of the villa in Riyadh has risen by more than 6% over the past year to about $ 1400 per square meter. The preference of rental apartments, Riyadh, is also witness to a shift to the demand for rent in exchange for ownership, with the increasing transfer of foreign workers and the migration of Saudi youth from other regions in the kingdom. “Their focus is not on buying a home, but on the rent, which sees a shortage of offer,” Dormani said. Durani is of the opinion that the construction market provides for hiring ‘major growth opportunities for developers’, saying that providing more buying options at reasonable prices will be an important factor to meet demand. “The challenge is not related to the absence of demand in the Saudi market, but we are currently not building the product that corresponds to the current demand.”