Property prices in Saudi Arabia’s capital Riyadh rose at their fastest pace in at least five years, according to a new report.
Apartment prices rose by 20 per cent on average in the past 12 months while villa prices were up 18.6 per cent, property consultancy Knight Frank said.
However, deal numbers have declined 27 per cent in the past year as households find themselves needing to save for longer before being able to transition to home ownership.
Transaction volumes across the kingdom fell to 60,000 during the first quarter, although total deal values receded by only 2 per cent to 40.4 billion Saudi riyals ($10.8 billion), reflecting the significant price growth
“The spectacular house price growth in the kingdom mirrors what we are seeing around the world,” said Faisal Durrani, partner and head of Middle East research at Knight Frank.
“However, in Saudi Arabia, the government’s programmes to boost home ownership have turbo-charged demand, development activity and house prices.”
Despite receding levels of demand, vendors are either holding firm on prices, or turning to the rental market instead, further contributing to the dip in overall deal activity and exacerbating the shortage of homes available for sale, said Mr Durrani.
Prices in the Red Sea port city of Jeddah have also risen in the 12 months to the first-quarter of 2022, according to Knight Frank.
Apartment prices are up 4.9 per cent while villas are 1.2 per cent more expensive.
Business activity in the kingdom’s non-oil private sector continued to improve in April, with the S&P Global Saudi Arabia Purchasing Managers’ Index hitting 55.7 in April, indicating a strong momentum in business conditions.
While lower than the kingdom’s March PMI reading of 56.8, non-oil business activity remains in expansion territory.
Saudi Arabia is amending the laws to attract more foreign investment to its property sector, as the country’s economy continues to rebound and attract more workers from abroad, local media reported last month.
The proposed amendment to rules governing foreign ownership of real estate will also increase competition in the sector, Asharq Al Awsat newspaper reported.
Updated: May 30, 2022, 7:13 AM