Saudi Bank Loans Surpass SR3 Trillion Amid Economic Growth

Saudi Arabia’s banking sector has reached a significant milestone, with total bank loans surpassing SR3 trillion ($801.6 billion) for the first time in January 2025, according to data from the Saudi Central Bank (SAMA). This represents a 14.66 percent year-on-year increase, marking the fastest expansion in credit since October 2022.

Corporate Lending Fuels Growth

The surge in lending is primarily driven by corporate credit, which grew by 18.5 percent over the past year, outpacing the 10.5 percent rise in retail lending. Corporate loans now make up 54.09 percent of total bank credit, up from 52.34 percent in 2024.

Among business sectors, real estate remains the top recipient of corporate loans, accounting for 21.13 percent of total business lending. Loans to this sector grew by 30.57 percent year-on-year to SR343.6 billion, reflecting increasing investment in the property market.

According to the General Authority for Statistics (GASTAT), Saudi Arabia’s real estate sector contributed SR176.18 billion to the real gross domestic product (GDP) in the first nine months of 2024, making up approximately 7 percent of the country’s total economic output.

Beyond real estate, the wholesale and retail trade sector secured SR204 billion in loans, representing 12.54 percent of total corporate lending, while manufacturing loans accounted for 11.7 percent, reaching SR190.2 billion.

Smaller sectors also experienced rapid loan growth, including:

• Professional, scientific, and technical services, which saw a 34.2 percent increase to SR8.38 billion.
• Education loans, rising 33.17 percent to SR8.43 billion.
• Financial and insurance sector loans, which grew 32.06 percent to SR137.62 billion.

Real Estate and Infrastructure Boom

Saudi Arabia’s real estate boom has been a key driver of loan expansion, fueled by population growth, urbanization, and major government-backed projects like NEOM, ROSHN, and Diriyah Gate. The Sakani housing program has also boosted demand for residential financing, while businesses and investors continue to seek opportunities in the commercial property market.

Meanwhile, growth in wholesale and retail trade has been fueled by rising consumer spending, an expanding middle class, and the e-commerce boom, leading to increased investment in logistics, supply chains, and retail infrastructure.

Government initiatives aimed at boosting local manufacturing and reducing import dependency have strengthened lending to industries such as pharmaceuticals, automotive production, and food processing, with incentives further encouraging domestic production.

Commercial Real Estate Prices on the Rise

Despite the strong lending growth, affordability challenges are emerging in the commercial real estate sector, where demand has driven up prices.

Recent GASTAT data revealed that commercial real estate prices rose by 5 percent year-on-year in the fourth quarter of 2024, with:

• Commercial land plot prices increasing 5.2 percent.
• Building costs rising 5.1 percent.

Saudi Arabia’s Real Estate Price Index recorded an overall 3.6 percent annual increase, with commercial properties witnessing sharper price hikes in certain segments. In Riyadh, prices surged by 10.2 percent, largely due to the Regional Headquarters Program, which encourages multinational corporations to establish offices in the capital.

Mega projects like NEOM, Diriyah Gate, and Qiddiya have further contributed to rising property values, as businesses compete for prime commercial spaces near these emerging economic zones. However, a limited supply of high-quality commercial properties has intensified price pressures, raising concerns about affordability for small and medium enterprises (SMEs).

Balancing Growth and Affordability

Saudi Arabia remains one of the most attractive commercial real estate markets in the region, supported by strong economic growth, government incentives, and increased foreign investment. However, rising property costs pose challenges for businesses, particularly SMEs.

Experts suggest that policy adjustments, such as expanding commercial property supply, revising zoning regulations, or offering incentives for SMEs, could help maintain a balance between growth and affordability.

As Saudi Arabia continues its ambitious Vision 2030 transformation, ensuring accessible commercial real estate will be crucial for sustaining economic momentum and fostering long-term business expansion.