Saudi Arabia’s housing market grapples with cooling demand as rising prices and borrowing costs deter homeownership. Knight Frank reports first-time buyer interest dropped to 29% in 2024, down from 40% in 2023. Over 1,000 households surveyed cite unaffordable prices, delayed savings goals, and limited financing options as key barriers.
Riyadh Prices Surge Amid Supply-Demand Mismatch
Apartment prices in Riyadh jumped nearly 11% in 2024, reaching $1,500 per square meter. Despite ambitious government efforts to boost homeownership to 70%, Knight Frank warns annual construction of 115,000 units until 2030 may miss buyer expectations. “Current pricing misaligns sharply with what Saudis can afford,” says Faisal Durrani, Knight Frank’s Head of Middle East Research.
Middle- and low-income budgets increasingly fall short of average home prices. Luxury developments cater to high earners, but this demographic remains small. State-backed NHC and developers like Roshn Group now prioritize affordable housing, while Dar Global Plc targets luxury projects, including a Trump-branded venture in Riyadh.
Oversupply Risks in Luxury Segment
Durrani warns of a potential luxury housing glut within five years without tapping international buyers. Recent relaxed foreign ownership rules in Makkah and Madinah signal progress, yet Riyadh remains the top investment hotspot. Foreigners can secure residency by investing $1.1 million in property, but broader legal reforms may unlock global demand.
Riyadh’s villa prices climbed over 6% to $1,400 per square meter in 2023. Surging rental demand now outpaces supply as expatriates and relocating Saudis opt for flexibility. “Young professionals prioritize renting, but stock remains limited,” Durrani notes. Build-to-rent projects could bridge this gap while affordable sales inventory expands.
“Saudi Arabia’s housing challenge isn’t lacking demand, it’s building the right product,” Durrani stresses. Balancing luxury ventures with mid-income units and rental options will define market stability. With strategic reforms, the kingdom could turn its housing squeeze into long-term growth—if stakeholders act swiftly.
