The residential rental market in Saudi Arabia is undergoing unprecedented changes, driven by rapid economic growth, population growth in major cities, and rising demand for residential units. In this context, the General Real Estate Authority\u2019s decision to implement a 365-day notice period prior to the non-renewal of a residential lease serves as an important regulatory tool to rebalance the real estate market and ensure stability for all parties.<\/p>\n\n\n\n
But more important than the decision itself is its expected impact on the market in the coming years, particularly with regard to supply, demand, and prices through 2030.
Data from the Ejar platform indicates that the value of real estate lease transactions in the Kingdom reached approximately 76 billion riyals in 2022, of which 35.1 billion riyals were for residential leases alone. With continued population and economic growth, the residential rental market is expected to reach approximately 100 billion riyals annually by 2030, driven by sustained demand for residential units in major cities such as Riyadh, Jeddah, and Dammam.<\/p>\n\n\n\n
Annual Growth Rate in the Rental Market<\/strong> In recent years, major cities have seen significant increases in rents due to three main factors: The Effect of the Notice Period on Supply and Demand<\/strong> This measure will certainly have an impact on rental prices over the next three years (2026\u20132029). Based on current data, the following scenarios can be anticipated: Market Forecasts Through 2030<\/strong> Factors That Calm the Market and Promote Stability<\/strong> Ultimately, we can affirm that the decision to require 365 days\u2019 notice represents an important step toward the maturity of the Saudi real estate market, as it brings the relationship between landlord and tenant into the realm of institutional regulation and reduces sudden price fluctuations. Reading time: <\/span> 3<\/span> Minutes<\/span><\/span>The residential rental market in Saudi Arabia is undergoing unprecedented changes, driven by rapid economic growth, population growth in major cities, and rising demand for residential units. In this context, the General Real Estate Authority\u2019s decision to implement a 365-day notice period prior to the non-renewal of a residential lease serves as an important regulatory tool to rebalance the real estate market and achieve \u2026 Read 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The annual growth rate of the rental market is estimated at approximately 7%, driven by urbanization, an increase in the expatriate workforce, and rising household incomes, making the rental market one of the most important economic indicators in the Saudi real estate sector.<\/p>\n\n\n\n
Population Growth and Internal Migration<\/strong>: The Kingdom's population exceeds 35 million, with an annual growth rate of approximately 3.3%, while a large proportion of the population is moving to major cities.
The Economic Boom and Major Projects<\/strong>: Projects linked to Saudi Vision 2030 have attracted global companies and educated individuals, which has increased the demand for housing.
Supply-and-demand gap:<\/strong> Market estimates indicate that 825,000 new housing units will be needed by 2030 to meet growing demand.
This equation explains why some cities have seen annual rent increases exceeding 10%, while some neighborhoods in Riyadh have experienced increases of up to 50% in recent years.<\/p>\n\n\n\n
But what impact does the notice period have on supply and demand? The regulatory decision to set a 365-day notice period aims to create an economic balance between supply and demand in the rental market through several mechanisms, including demand management: tenants now have sufficient time to plan their move or look for alternatives, which reduces sudden demand for units when leases expire, alleviates short-term price pressures, and improves supply\u2014as landlords and property managers have a full year to manage their residential units, whether to re-rent them, develop them, or sell them, thereby promoting better planning of the housing supply. This step also helps limit price volatility
In addition, the notice period helps reduce sudden rent hikes when leases expire, contributing to relative stability in rental prices in major cities.<\/p>\n\n\n\n
Slowdown in the Rate of Price Increases<\/strong>: From 10% per year in some cities to about 3\u20135% per year, thanks to regulation and contract stability.
Market Stability in Major Cities: With a long notice period in place, sudden price spikes are less likely to occur.
Pressure Continues in Riyadh: The city will remain under pressure from high demand as a result of its economic expansion and its ability to attract businesses and workers.<\/p>\n\n\n\n
If we examine market projections through 2030, we will find that, with continued population growth and rising demand for residential units, the residential rental market in Saudi Arabia is expected to reach approximately 100 billion riyals annually by 2030, a significant increase from the current market size of approximately 40\u201350 billion riyals.<\/p>\n\n\n\n
The market will remain subject to demand pressures in major cities, but new regulations\u2014including a one-year notice period\u2014will help calm the market and create relative price stability, with new residential projects under the National Housing Program expected to help meet part of the growing demand.<\/p>\n\n\n\n
In a market estimated to be worth tens of billions annually, these regulations help stabilize prices, improve the investment climate, and boost confidence in the real estate sector.
With the market expected to reach 100 billion riyals annually by 2030, the main challenge remains increasing the housing supply at a rate commensurate with population growth and rising demand to ensure a sustainable and stable real estate market.
Economic News<\/strong><\/p>","protected":false},"excerpt":{"rendered":"