Saudi Arabia Is Experiencing a Real Estate Boom with Vision 2030
Because of Vision 2030, an initiative in Saudi Arabia meant to reduce economic reliance on fossil fuels, numerous multibillion-dollar real estate projects have been launched. These projects have inspired additional market initiatives and are contributing to a record boom in real estate. Foreign investors are paying more attention to the developments in the Kingdom, and their increasing investments will only facilitate the boom.
Vision 2030 has led to several measures to diversify the economy through tourism, entertainment, and art, all of which relies on real estate development to improve quality of life for residents and visitors. Many foreign investors are eager to contribute now that they recognize the potential for future growth. Beyond that, government projects like ROSHN are working to increase homeownership by building affordable housing. These projects will also help sustain the real estate boom’s momentum.
The Exciting Growth of the Saudi Real Estate Market
It may be the beginning of the boom, but the value of real estate in Saudi Arabia is already increasing. In Riyadh, average apartment prices increased by 30 percent year-over-year from 2022 to 2023, with some particularly desirable neighborhoods seeing gains as high as 40 percent. In the same period, villa prices have increased by 20 percent.
These gains are occurring despite bringing many new units to the market, which is a promising sign for those hoping for continued price increases during a period of heavy construction. According to current estimates, more than 555,000 residential units and more than 6.1 million square meters of office space will be delivered by 2030 as a part of the Vision 2030 plan. The pace of construction in the Kingdom will be among the fastest in the world.
At present, Saudi Arabia has about 15 giga-projects under development. These projects are all in various stages of development with several representing standalone metropoles. Perhaps the most exciting project is NEOM, the largest to date of them all. NEOM will house 9 million residents when it is completed, with about 300,000 new homes expected.
At the same time, it is worth recognizing that only $7.5 billion of subprojects have been commissioned with construction progress just shy of 29 percent. This means there is still a lot of opportunity for investors and a lot of progress left to be made within the mega-project. The feasibility has been questioned, but a recent survey found that 30 percent of homeowners in the Kingdom are ready to spend $800,000 or more on a second home. With this level of demand, construction is unlikely to slow down.
How the Saudi Government Is Fueling the Market Boom
Moreover, the Saudi government has done a lot to increase business in Riyadh and many foreign companies are now establishing headquarters in the city. As this continues to occur, the population of Riyadh will naturally increase as foreign nationals and Saudi citizens who come in search of new opportunities. Professionals have estimated a population growth from about 6.8 million people currently to as many as 20 million by 2030.
With a population that is potentially more than quadrupling, the demand for housing and workspace will increase significantly. Against this background, some foreign investors have already announced their intention to support expansion of the real estate industry. For example, Investcorp Holdings in Bahrain has already announced its intention to invest $1 billion in the Saudi real estate market over the course of the next five years.
In addition, the Saudi government is focused on increasing homeownership in the Kingdom. Through the Real Estate Development Fund, the government will subsidize mortgages to make homeownership more within reach for citizens. Many citizens are excited about the new projects being developed in Saudi Arabia and looking at potential ownership opportunities there. In addition to NEOM, the Red Sea Project and Diriyah were two other projects with a lot of interest. Located just outside of Riyadh, Diriyah Gate is a $20 billion development slated to add 20,000 homes to the market when it is completed in 2027.
Jazan is another area getting a lot of attention recently. Located on the Red Sea, Jazan has gained a reputation for being the heart of the agricultural industry in Saudi Arabia. Some of the world’s top coffee producers are located there. A new oil refinery nearby is also expected to drive expansion, as well as the upcoming construction of a port.
Other Projects Getting Attention from Saudi Citizens
Other projects getting a lot of attention from Saudi citizens interested in home ownership are Infiniti and SEDRA. Located along the eastern coast of Al Khobar with views of the Arabian Gulf, Infiniti is a project comprising three high-rise buildings linked by infinity pools. Altogether, the project includes 480 residential units and includes a lot of food, retail, and mixed-use space. This project was launched particularly with Vision 2030 in mind as a way of expanding home ownership within the Kingdom.
In Riyadh, SEDRA will become a large, mixed-use community comprising 270 villas in the northeast part of the city. These villas will be modern with premium finishes. Alongside the villas, the community will include 2,100 residential units with public parks, playgrounds, and sports hubs. The destination was chosen for its quick access to main roads, as well as King Khalid International Airport.