Saudi's residential market shifts from sales to rentals

The Saudi Arabia Residential Market Report has been released by Knight Frank KSA, revealing a continuation of the slowdown seen in 2015. The main cities have seen a shift in demand from sales to rental properties.

Since the Arab Spring in 2011 various regulatory efforts at improving accessibility to real estate have been implemented. Whilst these efforts are a step in the right direction, the policies are only slowly filtering through. Data from the REDF reveals that while real estate loans trended up sharply from 2012-2014, the rate of growth slowed throughout 2015.

Meanwhile, the reduction in government spending is likely to impact the financing of real estate projects. Delays and scaling back of many real estate and infrastructure projects will further exacerbate the shortage of housing across the Kingdom.

Demand in Riyadh continues to be concentrated at the mid-to-lower end of the market. This trend is expected to continue into the future as Riyadh’s population is estimated to grow at two percent per annum over the next couple of years. Concerns remain over the capacity of the development pipeline and the type of product that is being delivered to the market.

In Jeddah, demand for residential property has been concentrated in the city centre but is now shifting to the North of the city towards Obhur. Areas surrounding the Kingdom Tower and Jeddah Economic City are expected to see residential growth and similarly, plots in South Obhur and close to the airport are witnessing substantial activity.

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