Introduction
Saudi Arabia’s real estate market is experiencing rapid growth and transformation as we approach 2025. Significant economic reforms and mega-projects within the Vision 2030 strategy are attracting global investors. Historically dependent on oil revenues, the country is actively developing new sectors such as tourism, entertainment, and technology, directly influencing real estate growth. Analysts report a notable rise in both prices and demand: in the first half of 2024, housing prices in Riyadh and Jeddah rose by approximately 10% and 5% respectively, with transaction volumes surging by 50%. This article explores key trends, growth drivers, attractive investment segments in Saudi Arabia’s real estate market for 2025, compares the market with neighboring countries (UAE, Oman, etc.), and provides investment recommendations and profitability calculations.
Current Market Trends in Saudi Arabia’s Real Estate
Rapid Demand Growth
Saudi Arabia shows strong fundamentals: an increasingly diversified economy and a rapidly growing, young population of over 36 million. These factors drive active housing demand. In 2023-2024, there has been a significant boom, with new mortgage loans and housing construction rising in line with the government’s goal of increasing homeownership among citizens. According to JLL consulting, home sales in Riyadh rose by ~10% year-on-year in 2024, with rental prices increasing by 9%. In Jeddah, the figures were +5% for prices and +4% for rents. These numbers point to a robust upward trend, supported by incoming capital and growing population.
Increasing Investment Profitability
Alongside rising prices, rental yields remain high. Gross rental yields in Riyadh reach ~9% per annum, while in Jeddah they are around ~8%, significantly higher than global averages (Dubai averages 6–7%). Global Property Guide confirms Riyadh’s gross rental yields at ~8.9%, among the region’s highest. Demand is fueled by locals and a growing number of expatriates. In 2024, foreign professionals continued to increase due to new businesses and projects. This demand allows property owners to regularly increase rental rates and profits.
Market Resilience to External Factors
Notably, geopolitical risks have minimally impacted Saudi Arabia’s real estate market. Despite regional instability, Saudi Arabia’s internal market remained stable, with no significant capital outflow or demand decline in 2024. The banking sector is stable, mortgage rates are state-regulated, and the Saudi Central Bank reduced the key interest rate in late 2024, enhancing loan accessibility. Mortgage lending volume increased by 13% in 2024, expanding the pool of potential homebuyers. Thus, current trends are marked by rising property values, robust demand, and attractive yields—an ideal scenario for investors.
Growth Drivers: Government Initiatives and Vision 2030
Government Reforms and Incentives
To diversify the economy, Saudi Arabia implemented several initiatives directly affecting real estate. The “Sakani” program supports housing purchases through subsidies and affordable mortgages, boosting residential market demand. The Kingdom has also simplified rules for foreign investors, introducing the Premium Residency system, allowing wealthy expatriates long-term visas and property ownership without a sponsor. Restrictions on job changes for foreign specialists were eased in 2021, and foreign capital is permitted in Mecca and Medina from 2025 via corporate structures. A fixed property transaction tax of 5%, replacing VAT, simplified expenses for buyers. These reforms foster a transparent and open market, gradually bringing Saudi Arabia closer to the investment attractiveness of the UAE.
Mega-Projects Under Vision 2030
The government’s Vision 2030 strategy, aimed at diversifying the economy, is the central growth driver. Large-scale projects include NEOM, a futuristic city on the Red Sea ($500 billion), The Line, industrial and scientific centers; the Red Sea Project, a luxury resort cluster with 50 islands and ~10,000 hotel rooms; Qiddiya, an entertainment city near Riyadh; and Diriyah Gate, a historical and cultural district transforming Riyadh’s suburbs into tourist hotspots. These projects attract billions of dollars in investments, creating new property markets. Infrastructure construction (airports, roads, metros) drives up land and property values. Investors acquiring property now can capitalize on future appreciation tied to these mega-projects. Vision 2030 targets increasing real estate’s GDP contribution from ~5.9% to 10% by 2030, underscoring the government’s commitment.
Economic Diversification and Tourism
Beyond constructing new cities, the Saudi government emphasizes tourism and business development. Introduced in 2019, tourist visas aim to attract up to 100 million tourists annually by 2030. Hotel revenues reached record levels in 2024, prompting new hotel construction. Developing business hubs, such as Riyadh’s King Abdullah Financial District, is attracting international corporations, increasing demand for commercial real estate. The logistics sector is growing, especially around port cities like Jeddah and Dammam, due to Saudi Arabia’s strategic location between Europe, Asia, and Africa. These combined factors boost demand across property types.
Attractive Investment Segments in 2025
Residential Real Estate (Apartments and Villas)
Residential properties remain a market leader with strong potential, driven by population growth and increasing homeownership rates.
Commercial Real Estate (Offices, Retail)
Commercial properties are highly promising due to increased foreign investments and the establishment of regional headquarters in Saudi Arabia.
Hotel and Resort Real Estate
Rapid expansion of the tourism sector creates excellent opportunities in hotel properties, serviced apartments, and resort investments.
Comparison with UAE, Oman, and Regional Markets
Transparency and Market Openness
Saudi Arabia has made substantial progress toward market openness, catching up with UAE standards, though still maintaining strategic controls.
Market Size and Growth
Saudi Arabia’s larger population and economic scale offer more significant growth potential compared to its regional neighbors.
Investment Returns and Risks
High rental yields and capital appreciation potential, alongside minimal economic and political risks, make Saudi Arabia an attractive investment destination.
Conclusion
In 2025, Saudi Arabia offers investors significant growth potential, supported by government initiatives, robust internal demand, and moderate competition. For forward-thinking investors entering the market now, Saudi real estate promises exceptional returns. Properly assessing location, segment choice, financial viability, and legal nuances can position Saudi real estate as a highly profitable asset in your investment portfolio for years to come.
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