Saudi Arabia Condominiums and Apartments Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023-2028)

The Saudi Arabia condominiums and apartments market is valued around USD 17 billion in the current year and is anticipated to register a CAGR of greater than 7% during the forecast period.

Key Highlights

• Housing demand in Saudi Arabia is anticipated to rise by more than 50% by 2030, reaching 153,000 homes from 99,600 homes in 2021. To reach a housing supply of 4.96 million homes by 2030, the Kingdom needs to build 1.2 million new homes during the next ten years. Over the past ten years, Saudi Arabia has transformed its housing market. Furthermore, by 2030, the Kingdom may reach its goals of having a housing sector that contributes 8.8% of the GDP and a 70% homeownership rate. The sector is moving forward, and the government's strong policies and actions, including the approval to launch diverse financial products and an increase in the standard of living and income, enable luxury homeownership for future generations.
• The country's northern region is the focus of developers and investors looking to build complexes. Shams Ar Riyadh, the largest future residential compound (anticipated to provide over 950 units, villas, and apartments), and Antara residential compound, another sizable development that will produce approximately 520 units, stand out among them. Compounds can be grouped into one of four typologies, A, B, C, or D, often based on the extent of their growth and the quality of the facilities, services, and amenities they provide. Class B compound has a land size between 20,000 and 50,000 Sqm, whereas a Class A compound often has a land area larger than 50,000 sqm. The land space of Class C and B compounds is between 10,000 and 15,000 square meters and 5,000 and 10,000 square meters, respectively. Type A compound's usual apartment and villa sizes are 65 to 140 square meters and 160 to 1,100 square meters, respectively.

Saudi Arabia Condominiums & Apartments Market Trends

Increasing Demand in Saudi Arabia's Apartment Rental Market

In the near to medium term, Saudi Arabia's rental market is anticipated to experience increasing demand as the kingdom's households deal with greater expenditures as a result of the increase in value-added tax. Household spending will continue to be of slight influence, and as the rental market becomes more appealing and competitively priced, we anticipate seeing a shift in favor of it. Furthermore, the expat-dependent levy and the slowing economy are putting pressure on apartment sales and rental rates. Additionally, compared to villas, apartments have witnessed a decline in demand. However, as more new buildings include apartments, the popularity of apartments in Saudi Arabia is rising in comparison to prior years. The multi-dwelling concept offers greater potential for revenue creation and is easily convertible to a rental model if sale absorption needs to be faster.

Future investments still include brand-new apartment buildings with contemporary amenities and fittings and private basement parking. Due to their proximity to Riyadh's central business district, existing flats in Saudi Arabia's eastern and central regions are more desirable in terms of location than villas, while the eastern region's land availability is generally higher than that of central districts.

The highest sale prices in the city for new apartment buildings continue to be in the central neighborhoods, which range from USD 799 to USD 1,252 per sqm. Apartments on the northern side were found to sell for between USD 533 and USD 1,145 per square meter. Apartments in the south were sold for between USD 400 and USD 1,065 per square meter. In the eastern portion of Riyadh, sale prices per square meter ranged from USD 400 to USD 959. Apartment prices in the western section of Riyadh have been noted to range from USD 400 to USD 800 per sqm.

Riyadh is Witnessing Significant Growth in the Luxury Residential Market

Saudi Arabia's capital and largest city, Riyadh, has a total population of 6.5 million people. The province of Riyadh has a population of about 8 million people. For both Saudis and non-Saudis who live and/or work in the city, its location along the heart of the Arabian Peninsula, combined with growing economic activities, makes it a popular commercial destination.

In spite of the current slump, demand for housing units, particularly in the inexpensive class, has been steadily rising, signaling a boom time for the residential market in Riyadh, the capital of Saudi Arabia. A large and growing population and increasing urbanization, reducing household sizes, and government initiatives are the key factors driving the expansion. Riyadh is the main residential hub, and West Riyad is where there is the highest demand for luxury apartments and first-rate office space. According to GASTAT data, the Kingdom's residential real estate prices rose by 1.7 percent annually in the fourth quarter of 2021. This increase is attributed to a 2-percent increase in the cost of residential land plots.

According to industry insiders, Riyadh's northern and central neighborhoods, including Al Ghadeer, Al Nada, Al Malga, and Al Wurud, fetch the highest rental rates. On the city's northern, central, and western sides, villa rentals often range between USD 18,641 and USD 54,591 per year, but rentals in the eastern and southern regions typically range between USD 11,717 and USD 41,276 per year.

In Riyadh, numerous new developments are in progress. New construction includes the USD 20 billion Diriyah Gate Project, which will have 20,000 dwelling units, the USD 17 billion King Salman Park neighborhood, which will have 12,000 units, and the USD 8 billion Qiddiyah mega-entertainment project.

Saudi Arabia Condominiums & Apartments Market Competitor Analysis

The Saudi Arabia condominiums and apartments market is fragmented with many players. Some of the major players in the market are Al Saedan Real Estate, Kingdom Holding Company, Ewaan, Al Ra'idah Investment Company, SEDCO Development, Jabal Omar Development Company, Makkah Construction & Development Co, and Emaar. The merger and acquisition (M&A) activity in Saudi Arabia is also expected to increase in the coming years, which is likely to increase condominiums and apartment development, encouraging more companies to enter the market.

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