Prospective homebuyers in Saudi Arabia may soon find relief as the Kingdom plans to introduce a substantial number of new homes, totaling 660,000 units, across the nation over the past year. This represents a significant increase of 30 percent in year-on-year terms, promising potential price drops in the housing market.
Rising Property Values and Mortgage Rates:
Cities like Riyadh and Jeddah have witnessed a notable surge in property values, which, coupled with increased mortgage rates, has made homeownership less accessible for first-time buyers and other potential investors. The introduction of a larger number of affordable homes into the market is expected to rekindle domestic demand.
Affordability Remains a Key Factor:
Faisal Durrani, Head of Research, Middle East, and Africa at Knight Frank, emphasizes that affordability remains a significant hurdle for many homebuyers in Saudi Arabia. The efforts to address this concern are critical for revitalizing the real estate market.
Distribution of New Homes:
While the specific allocation of these new homes among Saudi cities remains undisclosed, it is evident that Riyadh and Jeddah are poised to receive a significant share. Riyadh, in particular, is projected to have over 241,000 new homes by 2030, along with an astonishing 3.6 million square meters of office space.
Riyadh's Transformative Potential:
Riyadh, the Saudi capital, is a focal point for the nation's transformation, currently accounting for 18 percent of all real estate and development projects in progress. These projects are estimated to cost a staggering $229 billion, illustrating the Kingdom's commitment to urban development and progress.
Catering to Domestic Buyers:
Meeting the housing demands of domestic buyers, particularly those with budgets under SR1.5 million, is a significant challenge for "giga-project" developers. Many of these large-scale projects are expected to launch residential properties priced above $1 million, necessitating a balance between demand and price expectations.
Riyadh's Vision:
In Riyadh, the King Salman Park stands as one of the most advanced "giga projects," with substantial investments amounting to $8.8 billion in a $9 billion development. It is set for completion in 2027, offering over 12,000 homes, 600,000 square meters of office space, and more than half a million square meters of retail offerings.
2030 World Expo Ambition:
Riyadh's ambition to secure hosting rights for the 2030 World Expo adds to its grand vision. This opportunity could further propel the city's transformation and development, making it a focal point for both national and international interest.
