In a study, the website “Mordor Intelligence” revealed that the size of Saudi real estate market is estimated at $69.51 billion in 2024, and is expected to reach $101.62 billion by 2029, with a compound annual growth rate of 8% over the forecast period (2024–2029). The real estate market in the Kingdom of Saudi Arabia is expected to grow from $64.43 billion in 2023 to $94.19 billion by 2028, at a compound annual growth rate of 7.89% over the forecast period.
The study noted that figures for the Kingdom’s office sector and tenant demand remained strong during the fourth quarter of 2022. This was particularly true in Riyadh, where inventory levels remain low at best, and many upcoming projects are mostly fully pre-leased.
Riyadh Leads the Real Estate Market
Grade A offices in Riyadh also saw an increase in average rental rates of 5.8% year-over-year in 2022, while Grade B rents rose by 1.5%. As for average occupancy rates, both Class A and Class B saw a slight improvement in occupancy levels to 99.2% and 98.7% in 2022, recording year-over-year increases of 0.8 and 1.9 percentage points, respectively.
In Jeddah, Class A office rents rose by 7.4% in the 12 months through December 2022, while Class B rents remained unchanged. Occupancy rates for both Class A and Class B offices rose to 90.6% and 76.0%, compared to 87.8% and 74.6% in 2021. In the Eastern Province, the office markets in Dammam and Al-Khobar saw increases in Class A rents of 7.9% and 6.2%, respectively over the course of the year through 2022, while Class B rents remained stable. Class A occupancy rates in Dammam and Al-Khobar at the end of 2022 stood at 81.2% and 78.7%, respectively.
Meanwhile, residential transaction volumes in the Kingdom declined by 24.5% in 2022 compared to the previous year. Overall, the total number of residential transactions reached 175,067, with a total value of 126.5 billion Saudi riyals during this period, representing a marginal decline of 3.7% year-over-year. At the regional level, we saw a decline in the total transaction volume across the three major regions throughout 2022, with the total transaction volume in Riyadh, Jeddah, and Dammam falling by 33.9%, 2%, and 20.9%,2%, and 20.9%, respectively. Regarding price performance in the residential sector, average villa prices in Riyadh, Jeddah, and Dammam rose by 6.2%, 6.7%, and 17.4% in 2022.
