Standard & Poor’s credit rating agency stated that the Saudi real estate market is inherently more stable than that of Dubai, which mitigates the risks of rapid fluctuations in demand that could lead to pricing pressures.
The international rating agency attributed this to a number of reasons, including the fact that demand for real estate comes from Saudi Arabia’s larger and more stable resident population, as expatriates constitute a smaller segment of the population—about 42%— compared to Dubai, where the proportion of expatriates exceeds 90%. Therefore, any potential decline in the expatriate population, particularly during periodic recessions, would have a much smaller actual impact on home prices in Saudi Arabia.
Standard & Poor’s also stated that the second reason is the government’s support for housing demand through various initiatives such as Vision 2030. Standard & Poor’s credit rating agency projected that Saudi real estate development companies to experience significant growth, driven by a supply shortage and government support for the real estate and housing sectors.
In a report, the agency stated that demand in Saudi Arabia’s housing sector is supported by the government and its various initiatives, particularly the Kingdom’s Vision 2030, which aims to increase the rate of home ownership among citizens to 70%, Therefore, the government is expected to continue supporting and financing new housing supply.
It added that real estate transactions on the map increased by 52% in the first half of 2023, with this strong growth expected to continue, supported by a 9% increase in the number of developers on the map during the same period.
