REAL ESTATE

SAUDI PROPERTY MARKET ON THE RISE BUOYED BY HOUSING SCHEME

By the end of 2024, Saudi household ownership had climbed to 65.4%, exceeding the 65% target set for the Housing Program, a flagship initiative of Vision 2030. Over the course of the year, more than 122,000 families received housing support, while over 21,000 eligible families secured homes through development housing schemes, according to the programmeís annual report. 

The initiative helped engage more than 13,000 contracts for land products under the Ministry of Municipalities and Housing, about 16,000 contracts for self-construction, more than 49,000 contracts for ready-built units, and over 27,000 off-plan sales agreements.

The Housing Programís strategy remains focused on enabling Saudi families to own suitable homes with ease, offering a comprehensive range of housing and financing solutions tailored to diverse needs across all regions of the country. 

The real estate market is also witnessing tremendous activity as the economy grows, population levels rise, and investment flows surge, leading to greater demand for commercial and real estate property. 

Over the past two years ending in July, the Real Estate Brokerage System processed a total transaction value of around SAR 1.2 trillion from more than eight million real-estate deals, and the licensing of ove 86,000 individuals to practice real-estate brokerage. The agency has licenced 75 digital real-estate platforms, featuring over 685,000 approved listings. 

INDEX SHOWS HEALTHY MOMENTUM

The overall real estate market remains healthy. The national real estate price index rose by 3.2% year on year in the second quarter 2025, moderating from 4.3% in first quarter, as growth in the residential sector slowed. 

The residential segment, which is the biggest weight in the index, saw its annual growth rate fall sharply from 5.1% in Q1 to just 0.4% in Q2, according to the General Authority for Statistics (GASTAT).

On a quarterly basis, the overall real estate index posted a marginal 0.1% increase in Q2 2025. This was again led by commercial properties, where prices rose 7.9% compared to Q1, including an 8.6% rise in commercial land plots and a 3.0% increase in building prices. The agricultural sector also performed well, with prices up 1.7%. The residential market, however, moved in the opposite direction, falling 2.6% quarter on quarter. Within this segment, residential land prices dropped 4.0%, apartments 1.2%, and residential floors 0.9%, though villa prices bucked the trend with a 1.8% gain.

Regional trends were varied. At the national level, prices were up 3.2% year on year, but momentum shifted across provinces. The Eastern Region recorded the strongest growth at 4.2%, followed by Makkah at 3.9% and Riyadh at 3.6%, down sharply from its double-digit growth in Q1. Elsewhere, Tabuk, Hail, and Qassim all posted modest annual increases, while Aseer, Madinah, and Jazan recorded declines of 3.9%, 3.2%, and 2.8%, respectively. 

MORTGAGE-BACKED SECURITIES

In August, the Saudi Real Estate Refinance Company (SRC), a Public Investment Fund (PIF) subsidiary, launched the kingdomís first residential mortgage-backed securities (RMBS). By introducing an innovative asset class, this landmark transaction will help develop the capital markets and enhance liquidity in the real estate finance sector through the securitisation of residential real estate finance loans.

Securitisation, which gives rise to RMBS, opens attractive investment opportunities in high-credit-quality assets with medium-term maturities. The transaction was executed under stringent regulatory frameworks and transparent controls, underscoring the maturity of the kingdomís investment environment, reinforcing investor confidence in the local capital markets, and supporting the long-term stability of the financial sector.

The launch of the kingdom's first RMBS transaction marks a strategic step toward developing Saudi Arabiaís real estate finance market and enhancing its appeal to both domestic and foreign investors. This initiative provides innovative financing instruments that align with the objectives of Saudi Vision 2030 to raise homeownership rates and enable more Saudi families to own suitable homes. 

'The launch of the first RMBS transaction represents a qualitative leap in the development of the kingdomís secondary mortgage market, " said SRC CEO Majeed bin Fahd Al Abduljabbar.

The transaction will enhance liquidity in the real estate finance market, broaden the investor base, and enable financing institutions to manage capital and risk more efficiently, according to the CEO. ìIt also supports the deepening of capital markets and diversification of the national economy, marking an important first step in attracting both domestic and international investors."