Saudi Arabia’s Residential Market Sees Billion-Dollar Investment

DUBAI: A recent report from property consultant Knight Frank projects that private buyers in Saudi Arabia will inject $1.22 billion into the nation’s residential market this year. The report indicates that NEOM is the most desirable location for property acquisition.

Saudi Arabia, through its Public Investment Fund (PIF), has allocated significant capital to “giga-projects” like NEOM, an ambitious urban and industrial development project envisioned to be nearly the size of Belgium and situated along the Red Sea coast.

NEOM is planned to accommodate approximately nine million residents and is a key element of the Kingdom’s Vision 2030 economic diversification strategy, which aims to establish new economic sectors beyond oil.

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

The report also reveals that they plan to earmark $733 million for giga-projects. While NEOM is still a primary choice, increased options in the market and a limited supply of move-in-ready homes have diminished its formerly dominant position. Faisal Durrani, Knight Frank’s head of research for the Middle East and North Africa (MENA), noted that NEOM’s popularity has decreased from 84% in 2023 to 17% this year.

Factors Influencing Market Trends

“Several factors likely contribute to this shift, including the emergence of other giga-projects in the past two years, perceptions regarding the affordability of homes within NEOM’s subprojects, a scarcity of ready-to-move-into properties, a general lack of available homes for purchase, or a combination of these elements,” Durrani elaborated.

Research from the property consultant suggests that there is 2.75 billion riyals ($733.08 million) in potential private capital from Saudi nationals and Saudi-based expats that is ready to be invested in residential real estate within the giga-projects.