Market Trends of Saudi Arabia Condominiums and Apartments Industry
This section covers the major market trends shaping the Saudi Arabia Condominiums & Apartments Market according to our research experts:
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.
