Saudi Arabia’s residential real estate market is showing strong growth and diversification, driven by government initiatives under Vision 2030. A new JLL report for Q2 2025 highlights a resilient market with rising property prices, increasing supply, and a shift towards affordability and master-planned communities. The upcoming foreign ownership law is expected to further boost the sector by attracting international investment.
Key Market Performance Indicators
The Saudi residential real estate sector is not just growing; it’s evolving. The JLL report and data from the General Authority for Statistics show:
- Overall Market Growth: The total real estate market saw a 3.2% year-on-year increase in property prices in Q2 2025, with residential property costs specifically rising by 0.4%. This stable growth is a testament to the market’s resilience.
- Urban Center Dynamics: Performance varies across major cities, with Riyadh leading the way. The capital recorded a 15.1% annual increase in villa sales prices and a 13.3% rise in apartment prices.
- Jeddah’s Mixed Performance: In contrast, Jeddah’s market showed a more varied picture, with villa prices rising by 4.4% while apartment prices saw a slight decline of 3%. However, the city experienced a significant 46.1% year-on-year rise in sales transaction volumes, indicating strong underlying demand.
- The Rise of Apartments: Apartments now dominate the market, accounting for over 80% of transactions in most cities. This trend reflects a shift in end-user preferences towards affordability and a more urban, modern lifestyle.
Driving Forces and Future Outlook
The strong performance of the residential market is being propelled by several key factors aligned with Vision 2030:
- Government Initiatives: Programs aimed at increasing homeownership and a growing population are creating robust demand. Vision 2030 aims to increase the homeownership rate among Saudi citizens from 50% to 70% by 2030.
- Upcoming Foreign Ownership Law: A new law to be implemented in January 2026 will allow foreigners to own property under a regulated framework. This is a major development expected to attract international investment, transfer global expertise, and expand the supply of residential units.
- Master-Planned Communities: New housing supply is increasingly coming from master-planned communities, particularly in Riyadh and Jeddah. These communities are popular for their comprehensive amenities and integrated living environments, reshaping urban development and future supply.
Challenges and Diversification
While the market is strong, JLL’s report also points to varying activity across the Kingdom. Riyadh and Dammam saw a slight decline in sales transactions, while Jeddah and Alkhobar experienced robust growth. This highlights the importance of localized strategies for developers. The report encourages a focus on amenity-rich, high-end communities to meet the rising expectations of a more diverse population.
Overall, the Saudi residential market is strategically positioned for sustained growth, innovation, and increased international investment, thanks to ambitious government reforms and a market that is adapting to the changing needs of its residents.
