| 27 May 2024, Monday |

Saudi residential boom sees apartment prices climb at fastest pace in five years

According to the latest market analysis by property consultant Knight Frank, Saudi Arabia’s residential market continues to expand at a rapid pace, with apartment values in Riyadh and Jeddah showing the fastest rate of growth in five years.

According to Knight Frank, apartment values in Riyadh and Jeddah have increased by 17 percent and 12 percent, respectively, in the last year, owing to a trend of first-time buyers seeking smaller, more affordable units.

“The government’s drive to increase home ownership rates began in 2016, but house prices only began to accelerate in 2019,” said Faisal Durrani, partner and head of Middle East Research at Knight Frank. In fact, Riyadh apartment prices have risen 14.4 percent since 2019.”

The supply of new housing units in Saudi Arabia has also increased as a result of the government’s Sakani and Wafi programs, which have pushed the construction of affordable housing.

According to Knight Frank’s analysis, villa price growth is beginning to slow, which may be due to emerging affordability issues combined with other structural changes in the market.

“Contrary to popular belief, home ownership has become more affordable since the implementation of the National Transformational Plan,” Durani said. “Two-bedroom apartments, for example, cost 2.4 times annual earnings on average, compared to a multiplier of 2.7 in 2016, well within globally accepted affordability thresholds.”

“While villas have become more affordable as well, they can still cost anywhere from 7 to 12 times annual income.”

In addition to affordability issues, social changes are expected to drive demand away from traditional standalone villa properties, with smaller units, where community and lifestyle are at the heart of developments, offering modern comforts, set to reshape the Kingdom’s residential landscape,” Durrani explained.

“When it comes to villas, it’s not just affordability that’s becoming an issue; it’s also becoming more culturally acceptable for a family to buy an apartment as their first home.”

“Also, the country’s young demographic – 56 percent of whom are under the age of 35 – is expected to be less in favor of multi-generational living, creating even more demand for housing.”

  • alarabiya