Jadwa Investment Company revealed in its latest report that the Saudi real estate sector grew by 1.2% from the beginning of the year through the third quarter of the same year, compared to 1.4% and 6.6% during the same periods in 2022 and 2021, respectively.
The Jadwa Investment report attributed the slowdown in the real estate sector’s growth last year—which accounts for 11.2% of non-oil GDP—to weak mortgage lending, which led to a decline in confidence among real estate developers. Jadwa also expects this situation to change in the second half of 2023, as interest rates decline.
Growth of Housing Program Projects
The report noted a 35% decline in the volume of new residential mortgage loans provided by banks and finance companies last year, with the latest data from the Central Bank (SAMA) indicate that the total value of new mortgage loans reached 80 billion riyals last year, down from 123 billion riyals in 2022.
Jadwa expects that, despite some challenges facing the real estate sector, the future outlook for the real estate sector in Saudi Arabia appears brighter. Especially in the second half of 2024, when low interest rates will stimulate demand for mortgages, leading to increased activity in the real estate sector.
Forecasts Point to a Good Year for the Saudi Real Estate Sector in 2024
In the long term, Jadwa expects 2024 to be a good year for the real estate sector, supported by lower interest rates and increased demand for mortgages.
Jadwa Investment Company also expects the “Sakani” program, run by the Ministry of Housing in the Kingdom of Saudi Arabia, to continue supporting the real estate sector. The ministry plans to provide 100,000 housing units to families. Of these, 50,000 units will be developed in partnership with local real estate developers. Meanwhile, the Ministry of Housing aims to raise the homeownership rate to 70% by 2030.
Earlier, “Real Estate Exchange” indicators showed that the number of transactions in the Madinah region during the first half of February totaled 705, with a total value of 395.3 million Saudi riyals. This represents 1.5 % of the total value of real estate transactions across the Kingdom during the same period.
