Saudi Arabia’s Residential Market Anticipates $1.22 Billion in Private Buyer Spending

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 desired location for prospective home purchases.

The Kingdom of Saudi Arabia, through its Public Investment Fund (PIF), has allocated substantial funds to “giga-projects” such as NEOM. This ambitious urban and industrial endeavor, almost the size of Belgium, is under construction along the Red Sea coastline.

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

Residential Real Estate Investment Plans

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

The report further suggests that $733 million is earmarked for giga-projects. While NEOM maintains its appeal, increased market options and a scarcity of move-in-ready properties have diminished its previously dominant status. 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 Dynamics

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

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