Saudi Arabia’s Real Estate Market Posts 3.2% Annual Growth in Q2, Driven by Commercial Sector Surge

Saudi Arabia’s real estate market sustained its upward momentum in the second quarter of 2025, with property prices across the Kingdom rising by 3.2 percent year-on-year, according to new data from the General Authority for Statistics (GASTAT).

The growth was primarily fueled by the commercial real estate segment, which recorded an 11.7 percent annual increase, while residential property prices edged up slightly by 0.4 percent.

Strengthening the real estate sector remains a key pillar of Saudi Arabia’s Vision 2030 strategy, as the Kingdom continues its economic diversification efforts and seeks to attract global businesses and tourists. The Real Estate General Authority forecasts the market will reach $101.6 billion by 2029, supported by an annual compound growth rate of 8 percent starting from 2024.

Commercial land prices saw the most notable increase, jumping 12.7 percent year-on-year. Meanwhile, prices for commercial buildings rose by 2.7 percent, and shop and gallery prices climbed 4.1 percent.

International property consultancy Knight Frank has also highlighted the robust growth of Saudi Arabia’s commercial property sector. It reported that rents for Grade A office space in Riyadh surged to SR2,700 ($720) per square meter in Q1 2025, up 23 percent year-on-year. The government’s regional headquarters program, offering incentives such as a 30-year tax exemption, is playing a pivotal role in attracting multinational firms and bolstering demand for commercial space.

In the residential sector, land prices rose by 0.2 percent, villas by 3.2 percent, and residential floors by 1.5 percent. However, apartment prices declined 0.7 percent year-on-year.

Quarter-on-quarter, overall real estate prices increased by just 0.1 percent. Commercial real estate prices rose by 7.9 percent from the previous quarter, while residential property prices fell 2.6 percent, reflecting weaker demand. Residential land prices declined 4 percent, while apartment and floor prices fell by 1.2 percent and 0.9 percent, respectively. Villas were the only segment to post quarterly growth, rising 1.8 percent.

Agricultural land also saw modest growth, with prices up 1.7 percent over the previous quarter.

GASTAT noted that the annual growth rate in Q2 slowed compared to Q1, when the index rose 4.3 percent. The deceleration is largely attributed to softer residential demand, which carries the highest weight in the index.

Regionally, the Eastern Province led price growth with a 4.2 percent annual increase, followed by Makkah (3.9%) and Riyadh (3.6%). Tabuk saw a 4.7 percent rise, while Asir, Madinah, and Jazan recorded annual declines of 3.9 percent, 3.2 percent, and 2.8 percent, respectively.

A separate report from S&P Global in April predicted a strong outlook for Saudi Arabia’s retail real estate market, citing population growth, tourism expansion, and ongoing mega-projects as key drivers.