Saudi Arabia’s Real Estate Sector Poised for Strong Growth Amid Economic Reforms

Saudi Arabia’s real estate sector is set for significant expansion, driven by population growth, a booming tourism industry, and investor-friendly government policies, according to industry experts.

The Real Estate General Authority forecasts that the Kingdom’s property market will reach $101.62 billion by 2029, with a projected 8% compound annual growth rate (CAGR) from 2024. This surge is aligned with Vision 2030, Saudi Arabia’s ambitious economic diversification plan aimed at reducing dependence on oil revenues.

Key Drivers of Growth

Matthew Green, Head of Research at CBRE Middle East & North Africa, pointed to urbanization, infrastructure development, and foreign direct investments as key factors fueling the market. He highlighted the government’s aggressive investment in giga-projects as a major catalyst for employment growth and economic expansion.

“The country’s young, well-educated population, along with rising disposable incomes and liberalized market regulations, is also driving demand in the real estate sector,” said Green.

Sakani Program and REITs Boost Property Market

According to Saud Al-Sulaimani, Country Head of JLL Saudi Arabia, government initiatives such as the Sakani Program and Real Estate Investment Trusts (REITs) are playing a critical role in shaping the market.

“Sakani provides financial aid and land to Saudi citizens, while REITs encourage institutional investment. Additionally, relaxed foreign ownership laws are making Saudi Arabia’s real estate sector more attractive to global investors,” Al-Sulaimani explained.

Founded in 2017, the Sakani Program aims to increase homeownership rates to 70% by 2030. Meanwhile, the recent amendment by the Capital Market Authority, allowing foreign investors to own real estate in Makkah and Madinah through listed companies, is expected to further enhance investor confidence.

Housing Boom and Construction Surge

As part of its development strategy, Saudi Arabia plans to deliver 1.04 million new homes by 2030. Susan Amawi, General Manager at Knight Frank Saudi Arabia, noted that the national homeownership rate currently stands at 64%, with demand for housing continuing to grow.

“The surge in home values is testing affordability, but the upcoming housing supply is expected to drive new construction activity and job creation in the coming years,” said Amawi.

Regional Headquarters Program Driving Commercial Real Estate

Saudi Arabia’s Regional Headquarters (RHQ) program is also reshaping the commercial property market. International businesses relocating to the Kingdom have increased demand for high-quality office spaces, hospitality projects, and mixed-use developments.

“Office vacancy rates in Riyadh are now at record lows of around 2%, and rents for Grade A office spaces have risen by 51% over the past three years,” Amawi revealed.

Real Estate and Tourism: A Key Growth Sector

Saudi Arabia’s goal of attracting 150 million visitors annually by 2030 is creating vast opportunities in the hospitality sector. Faisal Durrani, Head of Research at Knight Frank, emphasized the need for diverse accommodation options to support tourism growth.

“There is significant demand for budget-friendly hotels and rental properties, especially as high costs remain a barrier to domestic travel for many Saudis,” Durrani said.

Additionally, experts stress the importance of developing secondary and tertiary cities with attractions that complement the Kingdom’s mega and giga-projects to ensure a well-balanced tourism landscape.

Technology and Smart Cities Transforming the Market

The integration of artificial intelligence (AI), Internet of Things (IoT), and digital property solutions is revolutionizing Saudi Arabia’s real estate sector.

“Smart building technologies, AI-powered property management, and virtual reality tours are becoming essential for enhancing tenant experience and improving market efficiency,” said Green.

Saudi Arabia’s Real Estate Market: A Unique Opportunity

Industry experts agree that Saudi Arabia’s real estate sector stands out globally due to its scale, cultural heritage, and giga-projects.

“The Kingdom remains in its nation-building stage, which gives it an advantage over more mature markets like the UAE,” Green concluded.

With massive investments, ambitious reforms, and a strong economy, Saudi Arabia is rapidly positioning itself as a leading global destination for real estate investment and development.