The The real estate sector in the Kingdom of Saudi Arabia saw remarkable growth in 2023, with prices rising across various regions and demand increasing for both residential and investment properties.
In an ongoing effort to improve the business environment and encourage investment, the Kingdom launched numerous legislative measures and reforms throughout 2023 aimed at streamlining procedures and providing incentives to investors. These steps also helped boost confidence and make the real estate market more attractive.
In the following report, we review the most prominent and rapidly developing real estate sectors and the factors that contributed to the growth of the real estate sector in the Kingdom.
The Most Developed Real Estate Sectors
The real estate sectors that witnessed remarkable growth during 2023 were diverse, including:
Residential Real Estate:
Residential real estate prices rose across various regions of the Kingdom. The average price per square meter for residential apartments in Riyadh increased by 10%, and in Jeddah by 15%.
Commercial real estate:
Commercial real estate prices across various regions of the Kingdom saw a marked increase during 2023. The average price per square meter for commercial offices in Riyadh rose by 15%, and in Jeddah by 20%.
Industrial Real Estate:
Industrial real estate prices in various regions of the Kingdom also recorded notable growth. The average price per square meter for industrial land in Riyadh rose by 20%, and in Jeddah by 25%.
Recovery in Real Estate Companies" Profits
The growth of the Saudi real estate sector contributed to the recovery of profits for companies Real Estate Sector in the Kingdom of Saudi Arabia, where profits saw an exceptional jump of 153% during the first nine months of 2023 compared to the same period in 2022.
This success is attributed to the significant real estate development and boom the sector is experiencing, resulting from the implementation of massive real estate development projects by the government and the private sector.
Meanwhile, financial results published by real estate companies on the Saudi Stock Exchange website ”Tadawul" that companies achieved a profit increase of 1.35 billion riyals ($367.5 million) in the third quarter of 2023, compared to the same period last year.
The consolidated profits of listed real estate companies reached approximately 2.23 billion riyals ($602.1 million), compared to 883.16 million riyals ($238.4 million) in the same period of 2022.
The sector’s consolidated net profits also increased by 84.39% year-over-year during the third quarter of 2023; 13 listed companies in the sector achieved consolidated profits of 971.04 million riyals, compared to 526.64 million riyals in the third quarter of last year.
Factors Driving the Development of the Saudi Real Estate Sector in 2023
A number of factors also contributed to the growth of the Kingdom’s real estate sector in 2023, including:
Saudi Vision 2030:
Saudi Vision 2030 focuses on achieving economic diversification and comprehensive well-being for citizens. This has led to increased demand for real estate from both local and international investors.
Major Projects:
Saudi Arabia has also launched several major projects, such as NEOM, Al-Qiddiya, and the Red Sea Project. This has led to increased demand for real estate in the areas surrounding these projects.
Economic Growth:
The Saudi economy also experienced remarkable growth during 2023. This led to an increase in the income of individuals and institutions, thereby increasing their ability to purchase real estate.
Stable Political and Security Conditions:
Furthermore, the Kingdom of Saudi Arabia enjoys stable political and security conditions. This attracts local and international investors to the Saudi real estate market.
