RIYADH: The demand for residential real estate in Riyadh and Jeddah is expected to stay strong due to population growth, according to a recent report.
Released by S&P Global, a capital market economy firm, the study noted that expat inflows are contributing to an average annual growth of 3.3 percent between 2024 and 2027.
Rental yields are also high, with year-on-year growth in the first half of 2024 reaching 9 percent in Riyadh and 4 percent in Jeddah, the report emphasized.
Saudi Arabia’s real estate sector is crucial to the economy, contributing about 7 percent to the GDP and supporting various other industries.
“We recently revised the outlook on our sovereign ratings on Saudi Arabia to positive from stable, reflecting our view of the country’s robust non-oil growth and economic resilience to fluctuating oil prices,” the S&P report stated.
“Vision 2030 aims for a 70 percent homeownership rate by 2030, and the country is on course to meet this, with the rate reaching 63.7 percent by the end of 2023, according to the Ministry of Municipal and Rural Affairs,” the report added.
The analysis further indicated that new residential units and mortgages will continue to increase in 2024, aligning with the homeownership target.
It also pointed out that reforms in visa policies and regulations could enhance direct foreign investment in the property sector.
However, the report highlighted that private real estate developers face substantial challenges, including rising construction costs and competition for funding from other Vision 2030 initiatives.
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