RIYADH: Residential real estate demand in Riyadh and Jeddah is expected to stay robust due to population growth, particularly from expat inflows, according to a new report from S&P Global.
The report forecasts an average annual growth of 3.3 percent in the residential real estate sector from 2024 to 2027.
Rental yields are also maintaining strong growth, with Riyadh seeing a 9 percent year-on-year increase in the first half of 2024, while Jeddah''s rental yields grew by 4 percent. Residential real estate remains a vital part of Saudi Arabia''s economy, contributing about 7 percent to the country''s gross domestic product and supporting a range of sectors.
The Saudi government''s Vision 2030 aims for a 70 percent homeownership rate by 2030. The homeownership rate stood at 63.7 percent by the end of 2023, according to the Ministry of Municipal and Rural Affairs. The report also highlighted that new residential units and mortgages are expected to rise in 2024 in line with this target.
The report further pointed out that visa policy reforms and regulatory changes could attract more foreign investment into the real estate sector. For example, the introduction of five new products under the Premium Residency program in January 2024 is expected to stimulate demand from foreign buyers, which will contribute to population growth.
"The Saudi government remains committed to the Vision 2030 goals, and we expect these reforms to drive further growth, though domestic factors, like homeownership targets, will remain the key drivers of the real estate market," the report said.
Despite the optimistic outlook, the report noted challenges for private developers, including rising construction costs and competition for financing from other Vision 2030 projects. Nevertheless, the supply of residential units is steadily increasing. Riyadh now has 1.5 million residential units, following the delivery of 16,200 units in the first half of 2024. In Jeddah, the number of residential units reached 891,000 after 11,300 units were delivered in the same period.
The total number of units in both cities is expected to increase by 16,000 more by the end of 2024. As domestic migration to urban centers continues, demand for residential properties will remain high, leading to a continued shortage of housing in major cities.
In the first half of 2024, Saudi Arabia''s real estate transactions totaled SR127.3 billion ($33.89 billion), with residential properties making up the largest share, according to a separate report by Sakan, a real estate platform.
Sakan''s data revealed that residential properties are the fastest-growing segment in terms of transaction value. The platform also reported a 1.6 percent rise in average prices in the third quarter of 2024. As part of Saudi Arabia''s Vision 2030, the country will need to build more than 1.2 million new housing units to meet its homeownership target.
The demand for high-quality residential properties in key neighborhoods is pushing prices higher, especially for premium apartment spaces. The report noted disparities in prices depending on the neighborhood, unit availability, and property quality.
When it comes to apartment rentals, the report emphasized that the growing expat population is contributing to rent fluctuations. In September 2024, housing rents increased by 11.2 percent, according to the General Authority for Statistics. With high-quality apartments in short supply, tenants often find themselves on waitlists or settling for available units.
Platforms like Sakan are playing a crucial role in the growth of Saudi Arabia''s real estate sector, offering technology-driven solutions to streamline property transactions. The platform connects international buyers to the Saudi market, facilitating a more efficient and transparent real estate process, and helping users make informed decisions.
RIYADH: Arab stock markets experienced a boost in trading values in October, with a monthly increase of 16.35 percent, according to the latest report by the Arab Monetary Fund.
The AMF''s monthly bulletin showed that the total trading values soared to $97.1 billion, up from $83.5 billion in September.
This surge came despite a slight overall dip of 0.57 percent in market capitalization, which ended the month at $4.27 trillion.
The gains were not universal, however, as 10 stock exchanges recorded increases in trading value, while four saw declines.
Market winners: exceptional growth in trading value
Oman''s Muscat Securities Market emerged as the top performer, registering a 185.03 percent increase in trading value. The market''s total value jumped to $515.7 million in October, compared to just $180.9 million in September.
Tunisia followed closely with a 161.66 percent rise, driven by robust investor activity, while Abu Dhabi''s financial market saw trading values almost double, with a 97.56 percent increase to reach $18.52 billion.
Other notable performers included Iraq, where trading values climbed by 52.57 percent, and Qatar, Oman, and Casablanca each recording double-digit percentage increases.
Smaller but meaningful gains were observed in Kuwait at 13.89 percent and Saudi Arabia at 4.69 percent.
Despite the widespread rises, Bahrain, Damascus, and Beirut faced steep declines in trading value. Bahrain was the worst hit, experiencing a 65.57 percent drop, followed by Damascus with a 50.13 percent decline and Beirut with a 43.86 percent dip.
The performance of individual market indices highlighted the uneven landscape across the region.
Iraq Stock Exchange: The standout performer with a 12.39 percent rise in its index, reflecting strong market sentiment and heightened investor interest.
Damascus Securities Exchange: Achieved a 6.99 percent increase in its index, maintaining its growth streak.
Dubai Financial Market: Recorded a 1.94 percent uptick, signaling stability in the UAE''s financial sector.
Muscat Securities Market: Saw a modest index increase of 0.83 percent, correlating with its strong performance in trading value.
Indices in several major markets experienced declines:
Saudi Stock Market: The index fell by 1.67 percent, reflecting cautious investor sentiment.
Egypt''s EGX30: Dropped by 2.94 percent, despite improved trading values.
Casablanca: Declined by 1.42 percent.
Palestine: Down 1.27 percent.
Market capitalization: Mixed signals amid trading gains
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