Saudi Arabia’s Residential Market Sees Significant Private Investment

DUBAI: A recent report from Knight Frank indicates that private buyers in Saudi Arabia are projected to invest $1.22 billion in the nation’s residential market this year. NEOM is currently the most desirable location for property acquisition.

Saudi Arabia has allocated substantial funds through its Public Investment Fund (PIF) towards ambitious “giga-projects,” including NEOM, an extensive urban and industrial development roughly the size of Belgium, situated along the Red Sea coast.

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

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 properties within the country.

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

Factors Influencing NEOM’s Shifting Popularity

“Several factors likely contribute to this shift, including the emergence of alternative giga-projects in the past two years, perceptions regarding affordability within NEOM’s subprojects, a shortage of readily available homes, limited properties available for purchase, or a combination thereof,” Durrani elaborated.

Research from the property consultant suggests 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 these giga-projects.