Saudi Residential Sales Hit SAR 118B - Deloitte Report Predicts Growth

Deloitte, a global leader in professional services, has published its latest review of Saudi Arabia’s real estate market, highlighting significant growth across all sectors. The report predicts that the market will continue to expand through 2025, driven by the ambitious Vision 2030 agenda and ongoing economic diversification efforts. Major upcoming events, including EXPO 2030 and the FIFA World Cup 2034™, alongside transformative giga-projects like NEOM, the Red Sea, and Qiddiya, are expected to shape new urban centres and enhance the Kingdom’s tourism landscape.

Optimistic Investment Forecasts and Foreign Direct Investment (FDI) Growth

The investment outlook for Saudi Arabia remains highly promising. The National Investment Strategy projects that FDI inflows will reach SAR 388 billion (USD 103.4 billion) by 2030, marking a compound annual growth rate (CAGR) of 22% from SAR 95.9 billion (USD 25.5 billion) in 2023. This reflects increasing investor confidence in the Kingdom's economic transformation and real estate opportunities.

Oliver Morgan, Partner and Head of Real Estate at Deloitte Middle East, commented: “Saudi Arabia's real estate sector is experiencing robust growth, driven by strategic government initiatives, strong economic fundamentals, substantial infrastructure investments and expanding international trade. These diverse growth drivers position Saudi Arabia as one of the region's most dynamic and promising real estate markets. Sustainable and smart developments, increasing demand for luxury and mixed-use properties, and a growing focus on affordable housing to serve the Kingdom's expanding population have caused residential transactions to rise steadily. Riyadh continues to solidify its position as the primary business hub, attracting significant foreign investment.”

Residential Market Performance: Rising Demand and Steady Growth

Fuelled by economic expansion and population growth, residential real estate transactions across Riyadh, Jeddah, and the Dammam Metropolitan Area (DMA) saw a remarkable 50% increase between 2023 and 2024. The total number of transactions reached 102,522 in 2024, amounting to SAR 118 billion (USD 32 billion).

Prices also saw steady growth, with Riyadh experiencing a 5% rise in apartment sales rates and a 12% increase for villas. In Jeddah and DMA, apartment prices grew by approximately 1%. Notably, around 69% of apartments sold in Riyadh were priced between SAR 250,000 and SAR 1 million (USD 66,000–266,000), catering to low- and middle-income buyers.

Office Market: Expanding Supply and Strong Demand

With Saudi Arabia’s GDP reaching SAR 3 trillion (USD 786 billion) in 2024 and projected to grow to SAR 3.7 trillion (USD 981 billion) by 2030, demand for office space remains high. Key sectors, particularly finance and business services, saw a 5.3% increase in demand for Grade A office space between 2023 and 2024.

At the close of 2024, office supply stood at 6.4 million sqm in Riyadh, 2.2 million sqm in Jeddah, and 1.5 million sqm in DMA. Significant projects, including Laysen Valley, STC Square Phase 1, and New East in Riyadh, contributed an additional 145,000 sqm of gross leasable area (GLA).

Jeddah added 150,000 sqm of new office space, supported by major developments such as JCDC and Darb Al Haramain. Furthermore, the Regional Headquarters Program attracted 571 companies to relocate to Riyadh in 2024, further driving demand for office space.

Hospitality Sector: Surpassing Tourism Targets

Saudi Arabia’s hospitality sector continues to flourish, with the Average Daily Rate (ADR) increasing to SAR 716 in 2024, up from SAR 702 in 2023. The Kingdom has already exceeded its Vision 2030 goal of attracting 100 million tourists annually—seven years ahead of schedule.

Riyadh has emerged as a hospitality powerhouse, outperforming global cities such as Hong Kong, Madrid, and Dubai, with its ADR reaching SAR 895 in 2024. The city’s success is largely driven by a booming corporate and leisure tourism sector, as well as the Riyadh Seasons event, which has significantly boosted domestic and international travel.

Jeddah remains a key gateway for tourism, with an ADR of SAR 680. The city’s waterfront developments are expected to strengthen its hospitality market further, particularly in anticipation of EXPO 2030 and the FIFA World Cup 2034. Additionally, investments in cultural heritage sites and attractions such as AlUla and New Murabba are set to elevate the sector’s appeal.

Retail Market: Evolving Consumer Preferences and New Trends

Retail sales in Saudi Arabia are projected to grow at a CAGR of 4.4% between 2025 and 2027, according to Oxford Economics. Developers are increasingly focusing on mixed-use retail spaces that offer entertainment and immersive experiences, moving away from traditional standalone shopping malls.

While retail rents saw a slight increase in 2024, older retail centres are struggling to compete with newer, more dynamic developments. A rising trend in the market is the growth of pop-up stores—temporary retail spaces designed to enhance customer engagement and brand awareness. These innovative retail concepts are gaining traction across major shopping centres in the Kingdom.

Industrial and Logistics Sector: Expanding Infrastructure and Trade Growth

The demand for warehousing and logistics facilities is on the rise, spurred by Saudi Arabia’s Vision 2030 initiatives. Programs such as the National Industrial Development and Logistics Program (NIDLP) and the establishment of Special Economic Zones, including Riyadh Integrated Logistics Zone, are driving sectoral expansion.

Saudi Arabia’s port infrastructure is also improving, with initiatives by the Saudi Ports Authority enhancing operations in Jeddah and DMA. Air cargo capacity has grown substantially, contributing to a 14% increase in total cargo throughput in 2024 compared to the previous year.

Future Outlook and Key Insights

Deloitte’s report also provides insights into the Kingdom’s evolving mortgage market, tax landscape focusing on real estate, and strategies for developing large-scale sports infrastructure. With continued government investment, foreign capital inflows, and strategic projects in place, Saudi Arabia’s real estate market is poised for sustained growth in the years ahead.