Saudi Arabia Real Estate Market Forecast 2026-2030
The Kingdom’s real estate market enters 2026 with powerful but contested fundamentals. Multiple growth forecasts converge around 7-8% CAGR: Grand View Research projects USD 201.4 billion by 2030 at 7.5%, Mordor Intelligence estimates USD 102.96 billion by 2031 at 7.17%, and REGA forecasts USD 101.62 billion by 2029 at 8% CAGR. The residential segment alone is projected at USD 164.85 billion in 2026, growing to USD 227.12 billion by 2031 at 6.62% CAGR according to Mordor Intelligence and ResearchAndMarkets. This analysis evaluates the base case, upside, and downside scenarios using the latest transaction data, price trend trajectories, and structural indicators.
Base Case: Sustained Growth With Moderation
The base case projects continued growth in the 5-7% annual range, moderating from the exceptional 10.6% Riyadh price growth of 2025 as new supply enters the market. The 105,000-unit delivery pipeline for 2026-2027 partially addresses the annual 115,000-home demand shortfall, but does not eliminate it — maintaining positive but moderated pricing pressure.
Supporting this trajectory is the H1 2025 transaction baseline: SAR 123.8 billion (USD 32.9 billion) in total real estate transactions, with 93,700 residential deals worth SAR 77.5 billion, up 7% year-on-year. The 2024 residential sales of SAR 118 billion across 102,522 transactions — a 50% increase versus 2023 — confirms the market’s expanding depth. Sales transactions commanding 65.1% of total market activity, anchored by villa purchases in Riyadh Al Narjis and Jeddah Al Hamra, suggest ownership-driven demand continues to dominate.
Mortgage market expansion continues to support transaction volumes, with the SAR 951.3 billion outstanding base providing structural lending capacity. The 28.3% annual increase in new mortgage loans through February 2025, driven by apartment lending, demonstrates the financing infrastructure’s capacity to absorb continued growth. The RMBS market, following August 2025 SAMA approval, gradually deepens capital markets infrastructure and should expand mortgage liquidity through the forecast period.
The five-year rent freeze creates a distinctive dynamic through September 2030: capital appreciation continues while rental income on existing leases is frozen, potentially redirecting investor focus toward capital gains over yield. National gross rental yields of 6.75% in Q1 2025 provide a reference point, but forward-looking models must account for the income ceiling on existing leases versus market-rate pricing on new completions.
Upside Scenario: Accelerated Growth
The upside case, projecting 8-12% annual growth, requires: successful foreign ownership implementation generating significant international demand, giga-project delivery meeting or exceeding timelines, sustained oil revenues supporting government spending, and RHQ programme continuation at current pace.
The foreign ownership law (Royal Decree M/14), effective January 2026, is the most significant demand-side catalyst in the forecast. Foreign individuals, companies, and investment funds can now acquire property in designated zones, with digital fractional ownership explicitly recognised by REGA. Expected foreign ownership caps of 70-90% in approved zones — including high-growth areas in Riyadh, Jeddah, and giga-project developments — provide meaningful access while maintaining local stability. If the foreign ownership framework generates demand comparable to Dubai’s post-2002 experience, the impact on luxury pricing and designated zone values could be transformational.
The 600+ RHQ companies represent an established demand base that could deepen further. Each regional headquarters requires minimum 15 senior employees, and the 30-year zero-tax status ensures this demand is structural. The programme has already exceeded its 2030 target ahead of schedule, and secondary effects — supplier networks, professional services, hospitality — continue to compound housing demand in the capital.
The demographic underpinning is robust: with 45% of Saudi nationals under 20 and 63% under 30, the household formation wave is only beginning. The May 2025 reduction of the minimum age for housing support from 25 to 20 years accelerates first-time buyer entry, potentially adding hundreds of thousands of eligible borrowers. REDF financing growth of 16.4% to USD 16.7 billion in 2024, with cumulative Sakani beneficiaries exceeding 1.2 million, demonstrates the government’s capacity to sustain demand-side support.
Downside Scenario: Growth Stall
The downside case, projecting 0-3% growth, emerges if: oil prices remain below fiscal breakeven (USD 90/barrel) for an extended period, giga-project delivery is further delayed or cancelled, supply pipeline delivery creates localised oversupply, or global economic conditions reduce foreign capital flows.
The December 2024 PIF spending cuts of 20%+ across 100+ companies, including 50+ development entities linked to giga-projects, demonstrate that fiscal pressure is actively constraining development pace. NEOM has been significantly scaled down from its original 170km linear city to a 2.4-5km pilot phase, with USD 50 billion already spent by late 2025. New Murabba’s completion has been pushed to 2040, with the Mukaab suspended following financial viability reassessment. Total construction contract value fell below USD 30 billion in 2025, down 60% from USD 71 billion in 2024, according to MEED.
Extended oil price weakness below USD 65/barrel — where Brent traded in early 2026 — could trigger further retrenchment across government-linked development entities. With the fiscal breakeven exceeding USD 90/barrel, sustained low oil prices compress both public investment capacity and consumer confidence.
The oversupply risk is concentrated in specific submarkets. Riyadh’s pipeline of 57,000-70,000 new units, combined with New Murabba’s first residential phases expected around 2027-2028 and KAFD delivery, could test absorption capacity in the capital’s northern expansion corridor. If supply waves coincide with any demand softening, localised price corrections of 5-10% are plausible in oversupplied micro-markets.
City-Level Forecasts
Riyadh: Moderating from 10.6% toward 5-8% as supply delivery accelerates and the comparison base normalises. The capital’s 2.18 million existing units and 9,500 completions in Q4 2025 establish the absorption baseline. Apartment prices at SAR 4,971-5,200/sqm in general areas are expected to rise 4-7%, villa prices 3-6%. Pipeline concentration of 57,000-70,000 units creates absorption risk in specific submarkets, particularly northern corridors where An Narjis and Al Sahafah already command up to SAR 11,000/sqm. Prime districts — Diplomatic Quarter at SAR 12,000-18,000/sqm and Al Olaya at SAR 10,000-15,000/sqm — should maintain premium positioning supported by RHQ demand and limited Grade A office vacancy (0.5-1%).
Jeddah: Steady 2-4% growth supported by tourism diversification and waterfront development. Apartment prices averaging SAR 4,360/sqm (up 1.6% YoY) and villa prices at SAR 5,140/sqm (up 3.1%) suggest moderate appreciation. The 1.23 million existing units and ROSHN MARAFY delivery of 14,000 units add institutional-grade supply. Luxury Al-Shati and Al-Hamra districts at SAR 8,000-14,000/sqm benefit from coastal premium and tourism proximity. Transaction volumes of 7,500 deals worth SAR 8.7 billion in Q3 2025 (up 10% QoQ) indicate healthy liquidity.
DMA: Potential for recovery after the 8.3% regional price decline, with 58.5% transaction volume increase and 3,000 Q3 2025 deals signalling a turning point. The 8.41% CAGR projection — highest among major cities — suggests strongest growth from 2027 onward as affordability advantages (entry-level villas at SAR 1,080/sqm) attract buyers priced out of Riyadh. The 725,812 existing units and industrial expansion provide a stable demand base.
Makkah and Madinah: Holy city markets follow distinct dynamics. Makkah’s H1 2025 pattern — 33% transaction value decline alongside 11% deal count increase — suggests continued compression toward affordable units, with apartment prices averaging SAR 3,650/sqm but exceeding SAR 10,000/sqm near the Haram. Madinah’s 49% transaction value surge and 38% volume growth position it as the Kingdom’s fastest-growing market, with apartment prices at SAR 3,835/sqm (up 2.5% YoY). Mega-projects including Jabal Omar (46 towers, 2.5 million sqm), Masar (USD 27 billion), and Rua Al Madinah reshape both cities.
Structural Drivers That Persist
Regardless of scenario, certain demand drivers persist through 2030: the under-30 demographic (63% of nationals), annual household formation exceeding 115,000 units, the homeownership drive (65.4% to 70%), and urbanisation with Riyadh absorbing the largest share of internal migration. The population of 35.3 million growing at 4.7% annually — with 15.7 million non-Saudi residents anchoring rental demand — provides a floor for market activity that insulates against severe downside scenarios.
The homeownership gap itself represents substantial latent demand. Closing the remaining 4.6 percentage points across approximately 20 million Saudi nationals implies 200,000-300,000 additional owned units needed, supporting both developer activity and transaction volumes regardless of cyclical conditions. The Sakani programme, with 54,000+ families served in H1 2025, continues converting latent demand into active transactions.
Investment Strategy Implications by Scenario
The three scenarios demand different investment approaches. In the base case, buy-and-hold strategies targeting Riyadh apartments at SAR 4,971-5,200/sqm and DMA properties at entry-level pricing offer the best risk-adjusted returns. National gross rental yields of 6.75% provide income support while 5-7% annual appreciation builds capital value. The five-year rent freeze favours new-build acquisitions where initial rents can be set at market rates versus existing stock where income is frozen.
In the upside scenario, early positioning in foreign-ownership-designated zones becomes critical. Luxury properties in Diriyah Gate, KAFD, and premium Riyadh districts could experience demand acceleration from international buyers. The luxury segment’s USD 15.1 billion base growing to USD 25.7 billion by 2033 provides the clearest upside exposure, with branded residences from Ritz-Carlton, Aman, and Armani commanding scarcity premiums.
In the downside scenario, defensiveness favours the DMA’s affordability positioning (entry-level villas at SAR 1,080/sqm), Sakani-eligible properties with government-guaranteed demand, and REIT positions that may offer buying opportunities after the sector’s 5.9% decline in 2025. The 19 Tadawul-listed REITs, currently trading at PE 63.2x versus a 3-year average of 36.1x, could represent value if direct market fundamentals reassert themselves in listed pricing.
Giga-Project Delivery Timeline Sensitivity
The market forecast is heavily sensitive to giga-project delivery timing. New Murabba’s 104,000+ residential units, originally targeted for 2030 completion, have been pushed to 2040 — a decade of deferred supply that significantly alters the medium-term supply-demand balance. If NEOM’s pilot phase delivers by 2030, it adds limited residential supply relative to the original 9-million-resident vision. Qiddiya’s phased approach (4,000 units Phase II, 11,000 Phase III through 2035) spreads delivery across a longer horizon.
The practical implication is that giga-project residential supply is unlikely to materially affect mainstream market balance before 2028-2029 at the earliest. This extends the window during which conventional developer supply — ROSHN, NHC, Dar Al Arkan, Emaar — determines market equilibrium and pricing. The supply pipeline of 105,000 units for 2026-2027 from conventional developers is therefore the most relevant supply variable for the immediate forecast period.
Key Risks and Watchpoints
Oil Price Sensitivity: With fiscal breakeven exceeding USD 90/barrel and Brent at USD 60-65, government revenue pressure constrains both direct investment and consumer spending. Each USD 10/barrel decline in sustained oil price reduces government revenue by approximately USD 30 billion annually.
Construction Capacity: USD 215.4 billion in construction contracts awarded from 2020-2025 has strained contractor and labour capacity. If the 115,000 annual home target requires full construction mobilisation while giga-projects also scale, construction costs may resume double-digit inflation, compressing developer margins and undermining affordability.
Regulatory Execution: The foreign ownership framework’s success depends on implementing regulation clarity, designated zone definition, and the efficiency of REGA’s registration processes. Delays or restrictive interpretation could limit the upside scenario’s probability.
Global Capital Flows: Rising global interest rates, geopolitical uncertainty, and competition from other emerging property markets (UAE, Egypt, Turkey) could divert international capital away from Saudi real estate despite the new ownership framework.
Mortgage Market Forecast
The mortgage market provides a leading indicator for real estate market direction. With total real estate loans at SAR 951.3 billion and growing 7.7% annually, the credit infrastructure is expanding to support continued transaction growth. The RMBS market, following August 2025 SAMA approval, is expected to scale gradually, diversifying mortgage funding beyond bank balance sheets and potentially reducing borrowing costs.
New mortgage origination at 108,795 contracts in 2025 (down 11% YoY) reflects normalisation rather than contraction. The H1 2025 housing finance of USD 12.8 billion (up 15% from H1 2024) and 28.3% apartment lending growth through February 2025 suggest the underlying demand for mortgage credit remains strong. The lowering of housing support eligibility from age 25 to 20 expands the borrower pool, while REDF financing growth of 16.4% to USD 16.7 billion in 2024 demonstrates sustained government commitment to subsidised credit.
Sector-wide bank capital adequacy at 19% provides capacity for continued real estate credit expansion. However, the concentration of real estate at 30% of total bank portfolios means any sustained price correction would have systemic implications, adding a regulatory dimension to the market forecast that SAMA monitors through stress testing and macroprudential oversight.
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