Saudi Arabia’s housing sector continued its pivotal role, accounting for approximately 63% of the total value real estate transactions in the Kingdom, which totaled 123.8 billion riyals during the first six months of the year, according to a report issued by the global real estate consulting firm Knight Frank.
During the first half of this year, approximately 93,700 residential real estate transactions were recorded, valued at 77.5 billion riyals, representing a 7% year-over-year increase, driven by growth in mortgage financing, government support initiatives, and the delivery of new residential projects in major cities.
Medina Leads the Way
According to the report, Madinah led the growth, recording a 49% jump in the value of real estate transactions to reach 3.4 billion riyals. The number of transactions in the city also rose by 38%, reflecting rising demand and growing investor confidence in the local market.
Transactions in Riyadh Declined
In the capital, Riyadh, the market entered a phase of “rebalancing” after a long period of expansion, with the value of transactions falling by 20% to 29 billion riyals, while their volume decreased by 31% compared to last year. Despite this slowdown, prices continued to rise, reflecting robust demand.
Average apartment prices rose by 10.6% in the second quarter of 2025, reaching 6,175 riyals per square meter. Some neighborhoods also saw significant increases in villa prices; in the Al-Taawon neighborhood, prices jumped by 32% to 9,470 riyals per square meter, while in the King Abdullah neighborhood, they rose by 17% to 7,656 riyals per square meter.
The launch of the Riyadh Metro in late 2024 has contributed to the growing appeal of areas near its stations, such as Al-Olaya, Al-Yasmin, and Hatin, while southern Riyadh continued to attract new segments of buyers as average apartment prices rose to 3,000 riyals per square meter.
New Incentive Legislation
Faisal Dorani, Head of Research for the Middle East and North Africa at Knight Frank, explained that one of the most significant developments in the market is the adoption of a system allowing foreign ownership of real estate, scheduled to take effect in early 2026, which is expected to boost market liquidity and increase investor confidence, especially as the pace of unit deliveries accelerates and the mortgage market undergoes reforms.
Rising Villa Prices
Across the Kingdom, villa prices continued to rise by 8.2% in the second quarter, reaching 5,470 riyals per square meter. North Riyadh topped the list of the most expensive areas with an average of 8,660 riyals per square meter, while the Al-Sahafa area recorded growth of 24% to reach 8,050 riyals per square meter, followed by Al-Narges with a 16.6% increase to 8,750 riyals per square meter.
Future Outlook
For his part, Harmen de Jong, Head of Advisory at Knight Frank in the Middle East, noted that Riyadh remains one of the most active real estate markets thanks to massive infrastructure projects and Vision 2030 initiatives. He added that the entry into force of the foreign ownership law next year will add new momentum to the market, emphasizing that the current adjustments are not a sign of weakness, but rather a natural step toward a more mature and sustainable market.
