Saudi Arabia Residential Real Estate Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Saudi Arabia Residential Real Estate Market Trends and Insights

Government-Backed Housing Initiatives Under Vision 2030 Improving Homeownership Access

Government-backed housing initiatives under Vision 2030 are transforming homeownership opportunities in Saudi Arabia, making it more accessible for citizens. As part of Vision 2030, the government targets a 70% homeownership rate by reducing down-payments to 5% and enhancing mortgage liquidity through securitization. The National Housing Company signed a USD 665 million agreement with China State Construction Engineering to deliver 20,000 housing units, showcasing strong execution capabilities and fostering international collaboration. Additionally, the Saudi Real Estate Refinance Company's USD 906 million portfolio acquisition from Saudi National Bank marked the Kingdom's largest secondary-market transaction, reinforcing investor confidence. Land-release programs and escrow-protected off-plan regulations further support these financing reforms, collectively expanding access to Saudi Arabia's residential real estate market.

Persistent Housing Shortage Sustaining Demand for New Residential Projects

The housing market in Saudi Arabia is grappling with a significant supply-demand imbalance, creating opportunities for new residential developments. Saudi Arabia is projected to require over 800,000 additional homes by 2030, maintaining strong demand across all price segments. However, the planned addition of 300,000 units by 2025 is insufficient to meet the annual household formation rate, particularly in Riyadh, where government hiring is concentrated. This shortfall is most pronounced among mid-income households, driving robust presales even during early construction phases. The Real Estate General Authority is actively ensuring quality compliance and encouraging developers to address underserved areas. These persistent deficits are expected to support long-term stability in the Saudi residential real estate market.

Expanding Young Population and Rising Household Formation Boosting Residential Demand

The residential real estate market in Saudi Arabia is undergoing a significant transformation, driven by demographic and economic shifts. With over two-thirds of the population under 35, the country is experiencing a rise in household formations as graduates secure non-oil jobs. This trend is increasing demand for smaller, amenity-rich apartments in central areas. Young Saudis often begin with rentals, invigorating the leasing market and creating a pathway to homeownership. Rental demand is particularly strong in Riyadh’s financial district and the industrial hubs of the Eastern Province, contributing to the growth of the residential real estate market. Additionally, affordable financing schemes for first-time buyers are enabling transitions into starter homes, supporting absorption across various unit classes^{[1]KAPSARC Researchers, “Demographic Shifts and Housing Demand,” KAPSARC, kapsarc.org}.

Large-Scale Urban Development and Infrastructure Projects Creating New Residential Hubs

Saudi Arabia's urban development initiatives are transforming the residential real estate market, creating vibrant and sustainable communities. Flagship projects such as NEOM, SEDRA, MARAFY, and Diriyah Gate are introducing thousands of walkable, mixed-use residential units. ROSHN plans to deliver 30,000 homes in SEDRA and over 14,000 in MARAFY, integrating heritage with advanced smart-city features. Enhanced transportation corridors are linking these hubs to key job clusters, reducing commute times and increasing land values. Significant contract awards, including Red Sea Global’s USD 175 million build-out, are driving construction activity and employment growth. These developments are extending the economic influence of Saudi Arabia's residential real estate market beyond traditional city centers.

High Construction Costs Driven by Material Price Volatility and Labor Shortages

The construction industry in Saudi Arabia is grappling with escalating costs, driven by material price volatility and labor shortages. In the first half of 2024, cement consumption reached 22.6 million tons, with prices ranging from USD 58.5 to 63.9 per ton, significantly impacting project budgets. Giga-projects exceeding USD 850 billion in value are monopolizing materials and skilled labor, causing delays. Developers in remote areas face higher freight costs, further challenging affordable housing projects. Although local manufacturing is expanding, it will take years to meet demand. Stockpiling and hedging strategies are increasing carrying costs, compressing margins in the Saudi Arabian residential real estate market.

Economic Dependence on Oil Prices Impacting Consumer Affordability and Investor Confidence

The Saudi Arabian economy's reliance on oil prices continues to shape consumer affordability and investor sentiment. Public-sector wages and housing fiscal outlays remain closely tied to oil revenues. Declines in oil prices quickly affect job security and disposable income. In January 2025, housing inflation reached 2%, with villa rents rising by 7.7%, placing pressure on middle-income renters. By June 2024, individual home-loan origination dropped 11% year-on-year to USD 1.41 billion as crude prices softened. Although foreign-ownership levies decreased to 5%, international buyers remain cautious, closely monitoring oil market trends before committing capital. To mitigate the impact of oil price volatility, Saudi Arabia is focusing on diversifying fiscal revenues and advancing mortgage securitization.

Segment Analysis

By Business Model: Sales Remain Core While Rentals Surge

Sales captured 64.6% of the Saudi Arabia residential real estate market in 2024, reflecting a cultural preference for ownership backed by subsidized mortgages and ample government land grants. Primary transactions often involve off-plan commitments secured through escrow structures that protect buyers and release funds in stages, reinforcing confidence. Developers such as ROSHN have embraced virtual showrooms and instant mortgage approvals to accelerate bookings for large master-planned districts. Meanwhile, the rental channel is forecast to grow at a 7.37% CAGR to 2030, powered by expatriate mobility and the demands of younger Saudis seeking flexible housing near new business districts. Leasing platforms such as Ejari are digitalizing contract issuance and rent collection, increasing transparency and professional management standards across the Saudi Arabia residential real estate market.

Rental growth clusters around Riyadh’s King Abdullah Financial District and the Dammam corridor, where petrochemical employers attract transient engineers. Institutional landlords are emerging; for instance, Sedco Capital is assembling a diversified multifamily portfolio, signaling gradual maturation toward an investable rental asset class. Technology tie-ups—ROSHN’s IoT collaboration with Cisco—support smart-home features that command rental premiums. Sales will continue to dominate value, yet rentals provide a safety valve during economic cycles and complement life-stage housing choices, enriching the overall Saudi Arabia residential real estate market structure.

By Property Type: Apartments Anchor High-Density Expansion

Apartments and condominiums secured 52.3% of revenue in 2024 and led growth with a 7.58% CAGR through 2030, underscoring their primacy in land-constrained metros. The segment excels at delivering scale: multi-story blocks in SEDRA, MARAFY, and ALDANAH yield cost efficiencies that hasten delivery schedules and align with Vision 2030 affordability objectives. Developers increasingly bundle co-working lounges, on-site childcare, and rooftop recreation into apartment complexes, matching evolving lifestyle expectations. Villas still attract extended families, yet escalating plot costs and utility bills are narrowing the affordability gap, steering middle-income buyers toward vertical living^{[2]MENAFN Newsroom, “ALDANAH Community Debut,” MENAFN, menafn.com}.

Demand tailwinds are pronounced in the Saudi Arabia residential real estate market size for apartments, where integrated transit links shorten commutes and align with government sustainability targets. Digital permitting, along with modular construction, is helping domestic firms like Dar Al Arkan trim build cycles by up to 15%. Foreign partners contribute façade engineering, façade cleaning robotics, and energy-efficient glazing systems, broadening unit appeal. With more than 70,000 apartment keys scheduled for handover across major cities by 2027, the segment will remain the centerpiece of new urban development.

By Price Band: Affordable Housing Gains Speed on Policy Tailwinds

Mid-market stock held 45.1% revenue share in 2024, but affordable housing is projected to outpace every other band at a 7.79% CAGR to 2030. The White Land tax, reduced down-payments, and subsidized long-tenor mortgages are converging to lower entry thresholds for households earning between USD 1,600 and USD 2,400 monthly. Projects in Riyadh’s Khuzam area offer units from USD 66,500 and report reservation rates above 75% within weeks of launch.

The Saudi Arabia residential real estate market size for affordable units is benefiting from international cost-reduction know-how: China State Construction Engineering applies precast panels that cut material wastage by 20%. Egyptian builders bring value engineering for interior layouts that comply with local cultural norms yet maximize sellable area. As macroeconomic headwinds persist, affordable housing’s counter-cyclical nature is likely to stabilize developer cash flows and reinforce Vision 2030 social goals.

Note: Segment shares of all individual segments available upon report purchase

By Mode of Sale: Primary Pipeline Maintains Top Position

Primary sales controlled 56.5% of 2024 revenue and are expected to expand at a 7.48% CAGR as mega-projects release successive construction phases. Escrow rules enacted in late 2024 channel funds into dedicated project accounts, nurturing trust and accelerating presales for communities such as ALDANAH in Dhahran, where 1,000 units were sold within three weeks of launch. Secondary transactions flourish in mature districts but face limited inventory and renovation overheads that temper growth.

Liquidity initiatives boost the Saudi Arabia residential real estate market size for primary transactions: SRERC securitizations recycle bank capital into new mortgage originations, while digital marketing cuts customer-acquisition costs. Developers incentivize early buyers through staged payment plans and furniture vouchers, ensuring construction drawdowns align with cash inflows. The continual rollout of large-scale phases will likely keep the primary market in pole position for the next five years, while secondary deals serve as a liquidity platform for move-up buyers.

Geography Analysis

In 2024, Riyadh maintained its leadership in the national transaction value, accounting for 40.4%, driven by the presence of government ministries, financial institutions, and headquarters of major giga-projects. The ongoing downtown renewal of New Murabba, along with metro expansions, is fostering the development of mixed-use clusters that integrate workplaces with an increasing housing supply. For instance, ROSHN’s SEDRA project is expected to deliver 30,000 new residences, enhancing product diversity and addressing the backlog of 85,000 potential buyers. High absorption rates have ensured that average delivery periods remain below 14 months, reflecting the operational efficiency of Saudi Arabia's residential real estate market.

Jeddah continues to hold its position as the second-largest market, supported by initiatives such as ROSHN’s MARAFY canal district and tourism-driven submarkets developed by Red Sea Global. Waterfront apartments are experiencing the fastest rental growth, fueled by increased year-round activity from cruise terminals and hospitality venues. The modernization of the port has also boosted logistics employment, and when combined with relaxed foreign-ownership regulations, it has attracted regional professionals seeking both lifestyle benefits and investment opportunities. Jeddah’s combination of cultural heritage and modern infrastructure aligns with Vision 2030’s objectives to diversify the economy, ensuring a steady demand for housing.

The Dammam Metropolitan Area is demonstrating the highest regional growth, with a compound annual growth rate (CAGR) of 8.21% projected through 2030. This growth is being driven by expansions in the petrochemical sector and upgrades to port infrastructure, which are attracting new labor inflows. Master plans such as Aldanah, located near Dhahran, are emerging as key destinations for knowledge workers, particularly those associated with Aramco and its downstream industries. Additionally, new corridors like NEOM and the Red Sea coast are developing into greenfield hubs, supported by renewable energy jobs and high-tech manufacturing. These regions benefit from lower land costs and favorable policy incentives, expanding the geographic scope of Saudi Arabia's residential real estate market while gradually alleviating the pressure on the country’s two largest cities.