Saudi Arabia’s Residential Market Anticipates $1.22 Billion Investment from Private Buyers

A recent report by property consultant Knight Frank indicates that private buyers in Saudi Arabia are projected to invest $1.22 billion in the nation’s residential market this year. The report highlights NEOM as the most preferred location for residential purchases.

Saudi Arabia, through its Public Investment Fund (PIF), has allocated substantial funds to “giga-projects” like NEOM. This ambitious urban and industrial development, envisioned to be nearly the size of Belgium, is under construction along the Red Sea coast.

NEOM is designed to accommodate approximately nine million residents and plays a crucial role in the kingdom’s Vision 2030, an economic diversification plan aimed at fostering growth beyond the oil sector.

According to a survey encompassing 1,037 households, including 100 Saudi-based expatriates, Saudi nationals and expats residing in Saudi Arabia intend to allocate $489 million to residential real estate within the country.

The survey further reveals plans to invest $733 million in giga-projects. While NEOM remains a primary choice, the availability of alternative options and a limited number of move-in-ready properties have slightly diminished its dominance, the report suggests. Faisal Durrani, Knight Frank’s head of research for the Middle East and North Africa (MENA), noted that NEOM’s preference has decreased from 84% in 2023 to 17% this year.

Factors Influencing Investment Decisions

Durrani stated, “Several factors likely contribute to this shift, including the emergence of new giga-projects in recent years, perceptions regarding affordability within NEOM’s subprojects, a scarcity of ready-to-occupy homes, a limited supply of purchasable properties, or a combination of these elements.”

Research from the property consultant indicates that Saudi nationals and Saudi-based expats have approximately 2.75 billion riyals ($733.08 million) in potential private capital earmarked for residential real estate investments within the giga-projects.