Residential price rise counters slip in Saudi commercial property

Alamy via Reuters

• Residential prices up 1.2%
• Overall property index up 0.6%
• Commercial sector down 0.5%

Residential property was the driving force behind a rise in Saudi Arabian real estate prices in the first quarter of 2024 as prices of commercial real estate fell, government statistics released this week showed. 

The overall real estate price index rose by 0.6 percent compared with the same quarter in 2023.

But while there was a 1.2 percent increase in residential prices, the commercial sector fell 0.5 percent and agricultural land prices dropped 0.1 percent. 

Residential prices have been consistently higher over the past year, peaking with a rise of 1.57 percent in the first quarter of 2023, figures from the General Authority for Statistics show. 

The index rise broadly reflects consumer price inflation which fell to 1.6 percent in March.

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Residential prices have been underpinned by rising land prices as the kingdom pursues the giga-projects at the heart of its economic transformation programme. One real estate consultancy called the country the world’s "biggest ever construction site". 

The government is trying to raise home ownership among nationals to 70 percent of the population by 2030 and attract affluent foreigners. 

The Saudi economy contracted by 0.8 percent in 2023 following oil output cuts in an attempt to push up oil prices but the International Monetary Fund has praised robust growth in the non-oil sector, which hit 50 percent of GDP for the first time.

The statistics authority said commercial real estate had been hit by a fall in the price of commercial land and exhibitions over the past two quarters, probably as a result of the economic slowdown.