Market Insight
Knight Frank Real Estate Consulting Company has projected that private sector buyers in Saudi Arabia will invest approximately $1.22 billion in the Kingdom’s housing market this year, with the NEOM project emerging as the most sought-after destination for home purchases.
The Saudi government, through its Public Investment Fund, has allocated hundreds of billions of dollars into considerable projects, including NEOM—a massive urban and industrial development initiative along the Red Sea coast, comparable in size to Belgium.
NEOM aims to accommodate roughly nine million residents and serves as a cornerstone of the Kingdom’s economic diversification strategy under Vision 2030, which seeks to generate new avenues for growth independent of oil.
A recent survey of 1,037 households, predominantly consisting of Saudi citizens and expatriates, indicates that these groups plan to invest around $489 million in residential properties, with an additional $733 million earmarked for significant projects.
While NEOM remains a primary choice, the report highlights challenges such as a saturated market and the scarcity of available homes, contributing to a decline in its appeal.
Faisal Duraani, Head of the Research Department for the Middle East and North Africa at Knight Frank, reported a significant decrease in NEOM’s desirability from 84% in 2023 to just 17% this year.
He noted several factors contributing to this trend, including the emergence of competing large-scale projects, concerns regarding families’ financial capacity to purchase homes within NEOM’s sub-projects, and the limited availability of ready-to-occupy housing.
In another assessment, Knight Frank found that Saudi citizens and expatriates in the Kingdom are prepared to allocate 2.75 billion riyals (approximately $733 million) from their personal capital for investments in real estate within these ambitious projects.
It is noteworthy that the Saudi government is on track to meet its housing program objectives as part of Vision 2030; achieving an increase in housing availability to 63.7% of families in 2024, with a goal of reaching 70% by the end of the current contract period.
According to the Saudi Ministry of Municipalities and Housing, over 205,000 housing units worth of sales projects have been licensed and initiated in the past year, with more than 60,000 housing units delivered and 165,000 plots of land made accessible through a residential platform, facilitating families in building homes tailored to their future needs.
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