Projections suggest that the Saudi capital, Riyadh, will emerge as the focal point of the country's real estate market growth, expected to capture nearly 50% of the market share by 2027. The residential sector is projected to grow at 7-8% annually, while the commercial sector is expected to witness a growth rate of 12% annually.
With an increasing number of major corporations relocating their regional headquarters to Saudi Arabia and setting up offices, the major cities, especially Riyadh, are witnessing rapid expansion in office spaces.
Jeddah and Dammam, as the other two major cities in Saudi Arabia, are also expected to experience a surge in the real estate market, capturing 25% and 9% of the market share, respectively, by 2027.
In August this year, Saudi Arabia opened up its real estate industry to foreign investment, announcing that foreigners would be able to purchase various types of properties, including commercial, residential, and agricultural estates. Once implemented, this policy is likely to attract more foreign investment into the residential and commercial sectors, further propelling market growth and potentially leading to an increase in real estate prices.
Another factor that makes the Saudi market appealing to buyers is the high rental yield, estimated to exceed 7%, comparable to that of Dubai. This makes Saudi Arabia a hot destination for domestic and international investors alike.
It is important to note that while the real estate market in Saudi Arabia holds promising prospects, investors should exercise caution and carefully consider the associated risks when participating.
The market's development is also faced with various challenges, including government regulations, land supply, among others, necessitating close collaboration with local partners to understand market dynamics and devise sound investment strategies.