Real Estate in Saudi Arabia to Grow in 2024 and 2025

Experts project Saudi Arabia’s real estate sector will grow in 2024 and in 2025 thanks to the kingdom’s investments.

A report by Arab News, entitled “GCC Real Estate: How Credit Scores Have Evolved”, explains the forecasted growth. According to the article, GCC countries’ real estate markets have experienced stable credit quality after years of volatility. Many GCC nations’ real estate companies have recovered and have gone back to their 2019 levels.

“Real estate markets in various GCC countries exhibit different dynamics,” the S&P report read. “But rated sector companies enjoy relatively stable credit quality after a volatile few years that saw downgrades, recovery, and restoration of credit profiles for most of the rated real estate companies in the region.”

The kingdom’s real estate market

In 2023, Saudi Arabia’s real estate market suffered from high interest rates, resulting in a decrease in real estate transactions. But with the interest rates’ decline in the second half of 2023, experts foresee more foreigners to buy properties.

“Sensitivity to high interest rates and price increases led to a reduction in real estate transactions in 2023,” the report stated. “We expect the demand to remain robust backed by Vision 2030 investments attracting new businesses and expats to the country.”

Saudi Arabia’s investments in non-oil economic activity have contributed to this growth in the property sector. Another factor is the increase in population. Meanwhile, S&P also forecasted that capital markets and banks would also contribute significantly to Saudi Arabia’s Vision 2030 objectives. Vision 2030 will more or less need USD 1 trillion to cover its investments over the next few years.

Non-oil activities

“Population growth of two-three per cent is a boost to the real estate sector,” the report also noted. “This is sustained by GCC governments’ reforms to support new businesses and expat inflow, including new visas, corporate-ownership rules, as well as new technology regulations.”

Because Saudi Arabia has sped up investments in non-oil activities such as real estate, S&P projects GDP growth of 3.3% in the medium term. The kingdom’s Vision 2030 projects in the service sector, increasing female workforce, and strong consumer demand also contribute to this growth.

S&P also commended Saudi Arabia for its massive economic and social transformation programs under Saudi Vision 2030. With these, S&P anticipates more investment projects that will establish new industries like tourism, moving away from petroleum wealth.

About Saudi Arabia’s Vision 2030

Under Saudi’s Vision 2030, authorities hope to transform the kingdom to establish a “diversified, innovative, and world-leading nation.” Three pillars support its transformation: 1) a vibrant society, 2) a thriving economy, and 3) an ambitious nation.

Specifically, the Saudi government is investing in sectors such as renewable energy, entertainment tourism, among others.

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