Saudi Arabia’s real estate boom: 1 million new homes by 2030

Saudi Arabia is poised to revolutionize its real estate market with plans to build over 1 million new homes by 2030, according to a recent report. This ambitious initiative is part of the broader Saudi Vision 2030, a strategic plan aimed at diversifying the economy and expanding housing access nationwide.

Significant growth in residential projects

Knight Frank’s annual Saudi Giga Projects Report reveals that since 2016, 1,048,000 residential units have been announced, with 4% already completed. The total value of real estate projects since 2016 has reached $1.3 trillion, with NEOM being the largest project at $28.6 billion.

Faisal Durrani, head of research for MENA at Knight Frank, highlighted a 58.5% increase in announced housing projects over the past year. This surge is part of a broader effort to raise homeownership rates to 70% by 2030, up from the current 64%.

“The rapid response from both private and public developers is critical,” said Durrani. “In Riyadh, the center of Saudi Arabia’s economic transformation, apartment prices have surged by 58% over the last three years, and villa prices by 38%. At SAR 5,155 per square meter, villa prices in Riyadh now exceed those in Jeddah for the first time.”

Increase in residential transactions and market support

In the first half of 2024, residential transactions made up 61% of real estate deals, reflecting a 41% increase in sales, with nearly 91,860 transactions recorded. The value of these transactions grew by 48% to SAR 77.6 billion, supported by government initiatives like the Sakani and Wafi programs, which helped push homeownership to 63.74% by the end of 2023.

Susan Amawi, general manager for KSA at Knight Frank, emphasized emphasized that upcoming changes to foreign ownership laws are expected to invigorate the market and address concerns about a potential oversupply of luxury housing.

She also pointed out the rising demand for mid- and lower-end properties, as affordability becomes a growing concern due to increasing prices and interest rates."The sharp rise in interest rates, from just 1% in 2021 to 6% today, is compounding these challenges,” Amawi added.

Expansion in office, retail, and hospitality sectors

Beyond residential real estate, the office and retail sectors are also set for significant growth. Riyadh is projected to add 4.6 million square meters of new office space and 2.6 million square meters of retail space by 2030. Additionally, 362,000 new hotel rooms are planned, focusing on 4- and 5-star categories to support rising tourism demand.

Saudi Arabia’s hospitality sector is flourishing, with the 2030 target for visitors increased to 150 million, following a record 27.4 million international visitors in 2023. This growth is driven by religious tourism, business travel, and global events.

The report also underscores the economic benefits of these developments, projecting that the 2030 World Expo could generate up to $7.8 billion in new economic activity for Riyadh.