In the 12 months to Q2 2024, Saudi Arabia's residential transactions volumes across its major cities - Riyadh, Jeddah, and Dammam Metropolitan Area (DMA) - recorded annual improvements of 51.6%, 43.2% and 22.4%, respectively, according to CBRE Middle East, the global leader in commercial real estate advisory services.

 

The fluctuations in residential sale transactions are mainly due to the stance adopted by potential buyers in awaiting the delivery of new modern stock, which is expected to bring quality finished units compared to the existing often aging stock in addition to the availability of suitable financing for many investors, with a segment of the population is looking for the ideal financing vehicles to get suitable mortgage provisions to facilitate their home acquisition despite government efforts to bolster retail financing facilities through the local banks, stated CBRE in its latest edition of Saudi Arabia’s Residential Market Notes.

 

Looking at Riyadh’s residential market, apartments have seen positive yearly price movements since Q3 2020, with sales values increasing by around 11.7% per annum over the past four years driving average sales rate to nearly SAR5,000 per square metre at the end of Q2 2024. 

 

Average villa prices have also generally been on an uptrend since 2019 despite encountering a brief dip in early 2020 and again in early 2021, when values dropped 4.8% to SAR3,820 per square metre, while prices have seen robust growth, with average villa values now resting around SAR5,824 per square metre at the end of June, after rising 3.3% year-on-year.

 

Average apartment prices in Jeddah have improved through 2019 despite a slight wobble during Covid, values generally remained on an upward trajectory until Q3 2022. 

 

However, the market has been broadly subdued since then with values currently siting at around SAR 3,945 per square metre, marginally below the Q4 2022 figure. Prices have fallen by 0.9% in the year to Q2 2024, although since Q2 2020, sales values have risen by an average of 2.6% per annum. 

 

In the aftermath of the pandemic, average villa prices declined ending in Q4 2020 with values at around SAR4,639 per square metre representing the market bottom with prices improving by an average CAGR of 4.4% per year since, well above the 0.8% at the end of Q2 2024, with average prices at SAR5,707 per square metre.

 

In the year-to-date in July 2024, total rental transactions in Riyadh increased by 6.1%, as compared to the same period in 2023. 

 

Among CBRE tracked residential districts in Riyadh during Q2 2024, while Jeddah’s apartment segment witnessed a 2.3% dip in the year to July 2024, largely due to the low number recorded in May. The same trend was noted across Riyadh and Jeddah and is associated with the government’s campaign to increase awareness of the EJAR platform and supporting regulations, which requires landlords and tenants to utilize the system to legitimize their transactions. 

 

During Q2 2024, among CBRE tracked residential districts in Riyadh, Hittin and Al-Malqa were found to have the highest average price ranges while districts such as As-Suwaidi and Al-Aziziyah commanded the lowest prices. Popular city districts such as As-Sulimaniyah, Al-Ta’awun, and An Nakheel continue to command the highest average apartment prices with the best value was to be found in districts such as Dar Al-Baida and Al-Aziziyah. 

 

Districts nearby the Red Sea have proven to command the highest villa prices in Jeddah, with Ash Shati and Al-Murjan districts seeing the highest price brackets. Meanwhile, Al-Amir Fawwaz was among the lowest priced areas for villas. 

 

The steady delivery of new apartments into Jeddah’s residential market over the past 18 months has resulted in significant fluctuation in average apartment sale prices. Additionally, the large quantum of new supply in districts such Al-Marwah, As Salamah and As Safa. has resulted in saturating of the segment, skewing average prices. 

 

Branded residences along the Red Sea continue to command the highest values in prominent districts like Obhur Al-Junobiyah, whilst the lowest sale prices are found in Ar Rayyan.

 

Matthew Green, the Head of Research Mena in Dubai, said: "The fundamentals for Saudi Arabia’s residential sector remain incredibly strong, as reflected in the sustained rental growth across key market in the Kingdom."

 

"Riyadh particularly is demonstrating attributes of an undersupplied market, driven by strong employment and population growth on the back of government investment projects, resulting in very tight supply in certain areas of the market as new deliveries fail to keep pace with the robust housing demand," he added.-TradeArabia News Service