Knight Frank – Saudi Arabia Residential Market Review Winter, 2023-24

Knight Frank's Saudi Arabia Residential Market Review for winter 2023-24 shows a slowdown in real estate transactions, with a -17% decrease in transaction volumes and a -9% decline in total deal value. Residential transactions, accounting for 58.7% of all deals, saw a -16% decrease in the number of sales. This slowdown is attributed to record house price growth, affordability challenges, and shifting demand dynamics as younger Saudis prefer renting over owning homes. The decline in mortgage rates, rising from 3% to 5% in the past year, has led to a -35% decrease in the number of mortgages issued and a -36% decrease in their value. The introduction of the new mortgage guarantee services firm, "Dhamanat," aims to address mortgage affordability and facilitate home financing. The announcement of Premium Residency Visa options is expected to boost demand for high-end homes from international buyers. Riyadh's real estate market stands out from the rest of the kingdom, with a 7% increase in transaction volumes. However, the total value of residential transactions in Riyadh has only risen by 1% during 2023, indicating a tapering of strong price growth. The government's vision to establish Riyadh as a new financial hub is expected to drive up home ownership demand levels, with a projected shortfall of 1.5 million homes by 2030 despite 241,000 expected completions.