Saudi Arabia’s Residential Market Sees Billion-Dollar Investment

DUBAI: A recent report from 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. NEOM is emerging as the preferred location for property acquisition.

The Kingdom has channeled significant investments, amounting to hundreds of billions of dollars, via the Public Investment Fund (PIF) into large-scale projects like NEOM. This ambitious urban and industrial endeavor, almost the size of Belgium, is being developed along the Red Sea coastline.

NEOM is planned to accommodate approximately nine million residents and is a key component of Saudi Arabia’s Vision 2030 economic diversification strategy, aiming to establish new economic sectors beyond oil.

A survey encompassing 1,037 households, including 100 Saudi-based expatriates, reveals that Saudi nationals and expats residing in the country intend to allocate $489 million to residential properties within Saudi Arabia.

The report also highlights plans to invest $733 million in giga-projects. While NEOM continues to be a primary choice, increasing market options and a scarcity of ready-to-occupy homes have somewhat 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 decreased from 84% in 2023 to 17% this year.

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

According to the property consultant’s research, Saudi nationals and Saudi-based expats possess approximately 2.75 billion riyals ($733.08 million) in potential private capital ready for investment in residential real estate within these giga-projects.