According to data from the Central Bank, there was significant growth in both residential mortgage and apartment loans in Saudi banks in August.
Of these, apartment loans saw a more substantial increase, reaching 45%. This could be attributed to the rising prices of standalone houses and private villas, making them unaffordable for the average income individual, thus prompting a shift towards apartment purchases.
Apartment financing is leading among financial companies, indicating the increasing popularity of apartment ownership among Saudi citizens. The supply of apartments in the market is continuously increasing, making it easier for people to access apartments, and there is a growing cultural acceptance of apartment living.
Moreover, the Saudi government is investing in urban development and city planning to enhance the infrastructure and amenities in urban areas, making apartments more appealing to both homebuyers and renters.
The housing sector in Saudi Arabia is an integral component of Vision 2030, aiming to reform the housing sector to meet the housing needs of Saudi families. Saudi plans to collaborate with the private sector to construct 300,000 housing units in the next five years and has launched projects worth over $1 trillion.
By 2030, Saudi plans to deliver over 555,000 housing units, 275,000 hotel rooms, more than 4.3 million square meters of retail space, and over 6.1 million square meters of new office space.
Notably, the Saudi government is in the process of enacting new laws to allow foreigners to purchase properties anywhere in the country. This move is expected to further drive the growth of the real estate market.
According to the regulations, foreigners will be allowed to own all types of real estate, including commercial, residential, and agricultural properties. Preliminary interpretations of this law suggest that foreigners will be able to own property anywhere in Saudi Arabia, including Mecca and Medina.
Saudi has proactively monitored the potential negative impacts of foreign property ownership and devised solutions to address any issues that may arise.
However, the dynamics of the real estate industry, including apartment and housing loans, may be influenced by various factors and market conditions.
For instance, global economic uncertainties and policy changes by the Saudi government may impact the real estate market. Additionally, with the development and modernization of cities, there might be a growing focus on apartment buildings. Investments in infrastructure and amenities in urban areas can make apartments more attractive to potential homebuyers and renters.
Nevertheless, the real estate industry in Saudi Arabia remains in a phase of growth. The development in the apartment market and the relaxation of foreign homeownership policies are contributing to the advancement of this sector. The Saudi government's goal in the housing sector is to meet the housing needs of Saudi families, a crucial component of Vision 2030.
With plans to construct 300,000 housing units in the next five years through collaboration with the private sector and the launch of projects worth over $1 trillion, Saudi Arabia is gradually emerging as the world's largest construction site.