Interview: Sultan Alshalash, Chairman, Alaqtar Real Estate Development
How has the real estate market changed in recent years in terms of regulations and market demand?
SULTAN ALSHALASH: Saudi Arabia’s real estate market has been transformed over the last 10 years, largely driven by regulatory changes. For decades Saudi urban development and real estate lagged behind other GCC markets due to the lack of a structured regulatory framework. Key provisions, such as those governing off-plan land sales, were only introduced around 2018. Additionally, tenant-landlord regulations were non-existent until recently, and these gaps have affected the quality and types of housing products available.
We have also seen a significant improvement in recent years in relation to how the market responds to changing regulations. Developers have begun to understand their clients better, so the quality of products – especially in the residential segment – has evolved. Today’s buyers, especially younger ones, are more open to modern, functional and aesthetically appealing homes. These individuals have travelled abroad and seen different ways of living, and they want something similar back home. There is a lot of optimism that we will see substantial upgrades in the variety and quality of residential developments in the near future.
To what extent has government intervention played a role in shaping real estate development?
ALSHALASH: Government intervention has been key in influencing the real estate landscape in Saudi Arabia. The establishment of the Ministry of Municipal and Rural Affairs in 2011 marked the beginning of this shift, and since 2016 the Kingdom has focused on improving regulations to support both developers and the housing market. Despite these advancements, challenges remain, particularly in securing financing for large-scale projects and in navigating the complexities of new developments in untapped locales like NEOM. The lack of infrastructure and population in these areas presents difficulties, especially for private developers.
In what ways do real estate development strategies differ between the Kingdom’s largest urban centres, and secondary and tertiary cities?
ALSHALASH: Real estate development strategies in Saudi Arabia vary considerably between major urban centres, and secondary or tertiary cities. In larger cities like Riyadh we are seeing a shift driven by the growing population and changing lifestyle preferences. The demand for residential properties, particularly apartments, has increased dramatically. A decade ago, it was almost impossible to convince investors to fund apartment projects in Riyadh, as people were not interested in such units. Preferences are changing, driven by rising real estate prices, higher living costs and the influx of young Saudis comfortable living in apartments.
However, the market is different in smaller cities. There is still a preference for standalone houses, primarily because of the greater purchasing power relative to real estate prices. The demand for houses in these cities is substantial, with growth far outpacing supply. In recent years cities like Qaseem, Jazan and Al Madinah have seen significant growth in real estate investment.
What impact does the push towards sustainability have on real estate developments in Saudi Arabia?
ALSHALASH: The focus on sustainability is growing in Saudi Arabia, primarily driven by government initiatives rather than market demand. While the private sector is exploring green construction methods such as 3D-printed houses, the impact on overall construction costs remains minimal compared to the high cost of land, which can account for 50-65% of a property’s value. However, sustainable development practices – including recycled water and energy-efficient utilities – are being integrated into larger government-led projects. As regulations continue to evolve and awareness of environmental issues increases, sustainability is expected to become a more prominent factor in both development strategies and buyer preferences.
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