Saudi Arabia’s Residential Market Sees Billion-Dollar Private Investment

DUBAI: A recent report from Knight Frank, a property consultant, projects that private buyers in Saudi Arabia will inject $1.22 billion into the nation’s residential market this year. NEOM is anticipated to be the prime location for these home purchases.

Saudi Arabia has channeled significant investments, amounting to hundreds of billions of dollars, through its Public Investment Fund (PIF) into large-scale projects such as NEOM. This ambitious urban and industrial development, almost the size of Belgium, is planned along the Red Sea coast.

NEOM is designed to accommodate approximately nine million residents and is a critical component of the kingdom’s Vision 2030 economic diversification strategy, which aims to foster growth beyond the oil sector.

According to a survey encompassing 1,037 households, including 100 Saudi-based expatriates, Saudi nationals and expats residing in the kingdom intend to allocate $489 million to domestic residential properties.

The report further indicates that they plan to earmark $733 million for giga-projects. While NEOM continues to be a preferred choice, the emergence of alternative options and a scarcity of move-in-ready homes have somewhat diminished its dominance. Faisal Durrani, Knight Frank’s head of research for the Middle East and North Africa (MENA), noted in the report that NEOM’s popularity has decreased from 84% in 2023 to 17% this year.

Factors Influencing NEOM’s Shifting Popularity
Reasons for the shift in preference include:
  • The introduction of other giga-projects in the past two years.
  • Concerns regarding affordability of homes within NEOM’s various subprojects.
  • A shortage of homes available for immediate occupancy.
  • A general lack of properties on the market for purchase.
  • Or a combination of all of the above.

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