According to Knight Frank, the total value of residential transactions in Saudi Arabia has increased by 6%, although the number of deals has decreased, with the volume of home sales this year falling by 24%.
“The affordability gulf between buyer expectations and the significant house price increases registered in cities across the Kingdom is underpinning the slowing in the number of home sales. Transaction volumes however are still rising and are in fact 6% up compared to this time last year, highlighting the pace of house price growth being experienced around the Kingdom. Indeed, in Riyadh, average apartment values are up 30% in the last 12 months and this is even higher at around 40% for some of the most desirable suburbs in north Riyadh. Villa prices in the capital have also risen by 20%, “ explained Faisal Durrani, Partner Head of Middle East Research.
In Riyadh, average apartment values are up 30% in the last 12 months
“Crucially, despite the enormous pipeline of around 200,000 new homes for the capital by 2030, price growth remains on a sharp upward trajectory. Our estimates suggest that Riyadh is expecting to face a deficit when factoring in the expected spike in population to 17 million by 2030, from 7.5 million today. To exacerbate matters, anecdotal evidence suggests some sellers are opting to lease their inventory to take advantage of the influx of domestic and international migrants being drawn to the city for work, which is further eroding the sales supply.”
An expected spike in population to 17 million by 2030, from 7.5 million today
Knight Frank says that escalating commercial activity in Riyadh and an increase in total employment in the city, which is causing a separate shortage of prime office space, are pushing up demand for residential units. Indeed, employment in Riyadh will have climbed by roughly 5% by the end of 2022, with a further 3% increase expected in 2023.
The entire volume of residences sold in Riyadh fell by 30% in the year to Q3 2022, hitting 7,750 transactions, down from 11,074 last year. Consequently, the total value of transactions dropped by 20% to approximately SAR 8 billion, reflecting the price growth, according to Knight Frank’s breakdown.