Dubai: Potential home buyers in Saudi Arabia could be in for some respite on prices, with the number of new planned homes rising to 660,000 units Kingdom-wide in the last 12 months. In year-on-year terms, that’s 30 per cent higher.
Property values had risen sharply in Riyadh, Jeddah and elsewhere, and along with the rise in mortgage values, it meant lower offtake from buyers. Especially among potential first-time buyers.
Which is why the higher number of new homes entering the pipeline could ‘re-ignite’ domestic demand, according to the property consultancy Knight Frank.
The western half of the Kingdom contains the highest concentration of headline grabbing projects in the country, including, of course, Neom, the $500 billion super-city. Neom overall is also progressing rapidly, with $70 billion of projects now awarded, 45% of which has been completed
All about being affordable
“Affordability is still a key hurdle for many buyers,” says Faisal Durrani, Head of Research, Middle East and Africa at Knight Frank.
What each of the prime Saudi cities will take of the new homes being built is not known, but Riyadh and Jeddah would obviously have the biggest shares. Riyadh alone should be having more than 241,000 homes by 2030 – and a whopping 3.6 million square metres of office space.
“The Saudi capital is a pivotal focus point for the country’s transformation and currently accounts for 18 per cent of all real estate and development projects underway,” says the report. Taken together, these will cost $229 billion.
That means the Kingdom’s pre-eminent urban areas continue to have a pipeline of active projects even as other parts of the country – new and older – see epoch-setting developments. Neom City being just one of them.
“The challenge for the nation’s ‘giga-project’ developers will be to cater to and appeal to domestic buyers, two-thirds of whom we know have home budgets of under SR1.5 million,” said Harmen do Jong, Knight Frank’s Partner – Head of Strategy & Consultancy, Saudi Arabia.
“With most giga-projects expected to launch residential product at over $1 million, bridging this gap between demand and expectations will undoubtedly emerge as a key consideration going forward.”
The Riyadh gameplan
In Riyadh, the King Salman Park is ‘one of the most advanced giga projects’, with $8.8 billion of contracts awarded in the $9 billion development as it heads for completion in 2027. That would mean 12,000 plus homes, more than 600,000 square metres of office space, and over half a million square metres of retail offerings.
“Of note is Riyadh’s ambition to secure hosting rights for the 2030 World Expo, which could help to crystalise the city’s grand vision,” said Durrani.
More to follow…