Saudi Arabia Real Estate Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Saudi Arabia Real Estate Market Trends and Insights

Vision 2030 Giga-Projects Anchor Multi-Decade Development Pipelines

The combined USD 1.3 trillion allocation for NEOM, Red Sea, Diriyah, Qiddiya, and New Murabba drives sustained demand across housing, hospitality, retail, and offices well past 2040^{[1]Knight Frank, “Saudi Arabia Vision 2030 Report,” knightfrank.com.sa}. NEOM alone targets 1.5 million residents by 2030, translating into 500,000 homes and 10 million m² of commercial space. Red Sea Phase 1 infrastructure finished in 2024, clearing the way for 8,000 hotel rooms across 16 resorts, while Diriyah awarded USD 2.1 billion in luxury-hotel contracts that same year. New Murabba’s December 2025 fast-track zoning pact compresses permitting by 18 months and embeds 30% energy-reduction targets. Although the special-economic-zone model accelerates approvals, its scale can crowd out private developers that lack similar land pipelines and utility tie-ins.

Demographic Momentum Fuels Housing Deficit Despite Record Delivery

Saudi Arabia’s population reached 35.3 million in 2024, rising 4.7% year on year, and household sizes continue to shrink, creating annual demand for 115,000 homes^{[2]General Authority for Statistics, “Labor Force Survey 2024,” stats.gov.sa}. Riyadh alone faces a 305,000-unit gap through 2034 despite cumulative delivery of 850,000 units by the Housing Program. Homeownership climbed to 65.4% in 2024, yet mid-market apartments priced between USD 133,000 and USD 400,000 still represent 72% of unmet demand. ROSHN’s USD 400 million in 2024 construction contracts cover only 30,000 units—well below the projected need. Limited secondary-market liquidity keeps mortgage penetration at 18% of GDP, half the emerging-market norm, even after the Saudi Real Estate Refinance Company’s USD 267 million portfolio acquisition.

Tourism and Entertainment Investments Reshape Hospitality and Mixed-Use Demand

Government targets for 150 million visitors by 2030 catalyze a 320,000-room hospitality pipeline that pulls global chains such as Hilton and Marriott deeper into the Saudi Arabian real estate market. Kingdom Holding revived the USD 7.2 billion Jeddah Tower in 2024, incorporating a 200-key luxury hotel and 120 serviced apartments to anchor Red Sea tourism. Mixed-use megaprojects like Wajhat Masar in Makkah add 24,000 hotel units and 13,000 homes, aimed at Umrah pilgrims who spend longer stays than Hajj visitors. Airline seat capacity and visa reforms must accelerate in parallel to avoid near-term oversupply flagged by CBRE^{[3]CBRE Saudi Arabia, “Riyadh Office Market Report Q1 2025,” cbre.com.sa}.

Industrial and Logistics Expansion Driven by Manufacturing Localization and E-Commerce

The National Industrial Development and Logistics Program plans 59 logistics centers that will lift warehouse inventory to 15 million m² by 2030. Amazon’s 390,000-ft² Riyadh facility and Maersk’s USD 100 million Jeddah park underscore global appetite for Saudi logistics assets. A 30-year PPP for an 850,000-m² Dammam zone brings private capital into infrastructure, a template earmarked for rollout in Riyadh and Jubail. AWS’s USD 5.3 billion data-center pledge further validates industrial land, though hazardous-material permitting remains centralized and slow.

Execution Capacity Constraints and Labor Shortages Threaten Delivery Timelines

Specialized trades now command 25%–40% wage premiums over 2022 levels as 2.8 million workers struggle to cover giga-project demand. NEOM’s workforce reached only 18,000 by mid-2024, far below the 50,000 units per year its schedule implies, and Red Sea Phase 2 resorts slipped six months due to 30% subcontractor turnover. Contractor margins compressed to mid-single digits, prompting three Riyadh mid-tier builders to file for bankruptcy in 2024. Saudization rules that require 30% local hires compound shortages because vocational training produces only one-third of the required graduates.

Construction Cost Inflation and Financing Pressures Squeeze Developer Feasibility

Cement and steel prices rose 25%–30% between 2023 and 2024, lifting overall build costs about 18%. Mortgage rates climbed to 6.5% in 2024, eroding buyer power by 12% and nudging activity toward lower-priced segments. Emaar The Economic City’s USD 307 million Q3 2024 loss and Jabal Omar’s pivot to land sales illustrate how inflation squeezes legacy players’ feasibility. International contractors now demand escalation clauses that add 15% contingencies to giga-project packages.

Segment Analysis

By Business Model – Sales Dominate but Rental Gains Momentum

Sales transactions accounted for 65.1% of the Saudi Arabian real estate market in 2025, anchored by villa purchases in Riyadh’s Al Narjis and Jeddah’s Al Hamra districts. Rental activity is projected to grow at a 7.85% CAGR to 2031 as Build-to-Rent platforms, corporate relocations, and flexible-lease products mature. Knight Frank notes that first-time-buyer participation fell to 29% in 2024 after mortgage rates rose 230 basis points. Ejar recorded 3 million digital leases in 2024, up 35%, giving institutions data transparency that underpins underwriting.

Institutional investors favor rental yields that averaged 6.8% for Riyadh Grade A apartments in 2024, some 120 basis points above 10-year government bonds, and the 5% transfer tax tilts marginal buyers toward leasing. RAFAL’s 2024 co-living launch with HIVE and Sakani’s income-cap gaps create a rental cohort of 1.2 million households that will keep absorption robust. Consequently, the Saudi Arabian real estate market size for rentals is set to narrow the gap with sales by the end of the forecast period.

By Property Type – Residential Still Largest, Logistics Fastest

Residential held 62.3% of the 2025 market value, reflecting strong cultural preference for ownership and ongoing Sakani subsidies. Yet logistics assets will post the highest growth, at a 7.92% CAGR to 2031, propelled by the 59-hub national plan and Amazon, Maersk, and AWS commitments that validate industrial yield profiles. Apartments and condominiums gain traction as ROSHN’s USD 400 million contracts deliver high-density stock, although villas remain 68% of Sakani handovers.

Office take-up reached 1.2 million m² in Riyadh during 2024, driving a 21% rent jump to USD 527/m² as ministries and banks clustered in King Abdullah Financial District. Retail shows a two-tier pattern where super-regional malls stay full, but community centers risk oversupply. Hospitality, counted within “Others,” adds 320,000 pipeline rooms, yet tourism visa timelines must keep pace to prevent occupancy stress.

By End-User – Corporations and SMEs Accelerate

Individuals and households commanded 69.4% of the Saudi Arabian real estate market share in 2025, but corporates and SMEs are forecast to expand at an 8.02% CAGR, the fastest among end-users. Financial institutions leased 1.8 million m² in King Abdullah Financial District at premiums 11% above city averages, while SME co-working memberships doubled to 8,500 firms in 2024.

Government entities and PIF-affiliated giga-projects comprise a rising “Others” segment that absorbed 12% of the 2025 value. Sustainability clauses—30% energy cuts and 40% water savings—are set to become standard for government leases after New Murabba’s December 2025 agreement, likely nudging private landlords to retrofit assets for compliance.

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

Geography Analysis

Riyadh remains the center of gravity for the Saudi Arabian real estate market, holding a 41.5% share in 2025 and tracking a 7.0% CAGR to 2031 as New Murabba and King Abdullah Financial District reshape the skyline. Grade A office rents climbed 21% in 2024 to USD 527/m², yet residential supply lags demand, prompting ROSHN’s commitment to 30,000 additional units that still cover only a fraction of the 305,000-home gap. Qiddiya’s entertainment complex and King Salman Park’s USD 1 billion mixed-use district layer new leisure and green-space narratives onto the capital’s growth story.

Jeddah accounted for roughly 28% of market value in 2025, supported by its USD 20 billion central regeneration project and the high-rise ambition of Jeddah Tower. Office rents improved 13.6% to USD 375/m² in 2024 as logistics firms clustered near Jeddah Islamic Port. The city’s 29 investment prospects covering 1.4 million m² aim to diversify away from maritime trade and absorb 45,000 housing units by 2030, although older stock will need modernization to compete for institutional capital.

The Dammam Metropolitan Area, including Jubail, is set for the fastest expansion at an 8.41% CAGR, propelled by petrochemical joint ventures and a 59-hub logistics mandate that calls for 5 million m² of warehouses by 2030. Office vacancy still sits at 14%, hinting at legacy oversupply, but corporate compound acquisitions at USD 213,000 per unit provide a cost edge over Riyadh, encouraging workforce relocation. Elsewhere, mega-projects in Makkah, Madinah, and Tabuk (NEOM) capture 30.5% of value, leveraging religious tourism and special-economic-zone incentives, albeit tempered by infrastructure build-outs that remain only partially complete.