In a recent report, the global credit rating agency Standard & Poor’s continued growth in the residential real estate market in Saudi Arabia, driven by ambitious government plans and changing consumer preferences. At the same time, however, it warned of the need to carefully manage costs and implementation risks, especially given the current economic challenges and relatively high interest rates.
Homeownership rate nears target
The report noted that the Saudi government remains the primary driving force behind the growth of real estate market, thanks to its stated targets under Vision 2030, which aim to raise the homeownership rate to 70%. The rate has already reached 65.4% in 2024, indicating that Saudi Arabia is close to achieving this ambitious goal.
Population Growth Supports the Real Estate Market
The agency warned that global trade tensions could pose a challenge to real estate growth in the Kingdom, as they could lead to an economic slowdown, rising inflation rates, and potential pressure on oil prices—all of which could negatively impact real estate activity.
However, it also emphasized that continued population growth and a shortage of supply in major cities, along with Vision 2030 projects, will be key factors supporting the market’s continued momentum.
Housing Prices Rise... and Real Estate Financing Expands
The report highlighted that housing prices saw a notable increase in various regions of the Kingdom during 2024, driven by growing demand and government financing support. The value of new mortgage financing also rose by 17% to reach 91 billion riyals, after the Saudi Central Bank cut interest rates by 100 basis points, in line with U.S. monetary easing policy.
The Role of «Damanat» and the Roadmap Projects in Supporting Real Estate Financing
The agency highlighted the growing role played by initiatives such as the Saudi Housing Guarantee Services Company (Damanat), a subsidiary of the Real Estate Development Fund, in promoting housing financing, especially for low-income groups. It also predicted that the expansion of off-plan housing projects would lead to a significant increase in the share of mortgage financing directed toward these projects in the coming years.
Housing supply continues to grow… and the future looks promising
According to data cited in the report from an analysis by Knight Frank, the number of housing units in five major cities (Riyadh, Jeddah, Dammam, Mecca, and Medina) reached approximately 3.5 million units in 2024. This number is expected to rise to about 3.9 million residential units by the end of 2028, as the government continues its efforts to expand supply and meet demand.
