Saudi Arabia’s construction and real estate sectors are booming as the Kingdom continues on its path to comprehensive socio-economic transformation under Vision 2030. It is currently a world leader for construction activity, with a pipeline of projects valued at around $1.5trn, according to 2024 data from real estate services company JLL. These developments, however, go beyond simply expanding the country’s infrastructure and housing to accommodate its growing population; rather, they are rooted in the foundational pillars of the country’s transformative Vision 2030 programme, a roadmap for economic diversification with a strong focus on sustainability, technological innovation, improving quality of life and boosting the Kingdom’s international standing. With projects ranging from luxury tourist destinations to sports facilities and largescale urban environments, the trajectory of Saudi construction and real estate is notable in terms of its ambition, its sustainable and boundary-pushing concepts, and its scale and investment opportunities.
Structure & Oversight
The Ministry of Municipalities and Housing (MoMH) – formerly the Ministry of Municipal and Rural Affairs and Housing – is responsible for, among other things, urban planning, the management of maintenance services and urban sustainability. The ministry also operates the online municipal services portal, Balady, which provides project coordination services and issues construction licences, among others. The Saudi Contractors Authority (SCA), meanwhile, is a non-profit, private sector-led body under MoMH supervision, which aims to provide organisational oversight of the contracting sector. It provides assistance with contract registration, business solutions, industry regulations and standards, alongside other tasks. The SCA also operates Muqawil, an online platform for contractors that provides e-services including consulting, contractor evaluation and training programmes.
In 2021 Saudi Arabia established a National Infrastructure Fund (Infra), which is charged with serving as a development-financing partner for infrastructure projects. The primary goal of Infra is to enable and accelerate strategic projects that are in line with Vision 2030, with a view to supporting up to SR200bn ($53.3bn) in investment through to 2030. Notably, the fund is designed to work in partnership with local and international investors.
According to the trade publication Construction Week Middle East the top-10 Saudi construction firms in 2024, in descending order, were: Nesma and Partners, El Seif Engineering Contracting, AlBawani, Almabani, IHCC, Shahm Contracting Company, Constructing and Planning Company, Al-Ayuni Investment and Contracting, Contracting and Construction Enterprises and Alfanar Projects. The rankings were formulated based on four criteria: notable achievements in the past 12 months, projects completed within 2023-24, current backlog and 2023 revenue.
Managing Property
In the real estate segment, meanwhile, there are several key authorities, regulations and recent developments that are driving growth. The Real Estate General Authority oversees, regulates and promotes non-governmental real estate activities, with the goal of attracting investment to the sector. The authority grants licences and permits, monitors compliance and provides data and statistics to support decision-making. The State Properties General Authority manages government properties with a focus on their preservation while also increasing their economic efficiency and productivity. Its wide-ranging functions include the supervision of public properties, proposing draft laws, and concluding financing contracts and agreements. Elsewhere, the National Housing Company (NHC), a government investment vehicle, plays a strategic role in driving residential development and implementing housing objectives under Vision 2030. The NHC is tasked with delivering affordable housing, supporting public-private partnerships and developing new urban communities.
Title registration operations within the Kingdom are handled by the National Real Estate Registration Services Company, which was launched in 2022 to provide a digital database of property across the country. Land ownership is governed by the 2022 Real Estate Registration Law and its executive rules. Types of land ownership in Saudi Arabia include freehold and leasehold interests, usufruct rights and easements. Non-Saudi nationals who wish to own property in the country have traditionally faced tough restrictions, but the government has recently demonstrated a significant shift in its approach to foreign ownership. In early 2024 it announced the expansion if its premium residency visas to include a luxury property ownership option (see analysis). Amendments to the real estate transaction tax regulations were announced in May 2024, broadening exemptions for certain real estate transactions and incentivising public participation in capital markets.
Economic Contribution
The real estate and construction sectors are important contributors to the national economy, with the former constituting 5.9% of GDP in 2023 and the latter 5.2% that year. Both sectors experienced growth in 2023, with construction expanding 4.3% and real estate 1.2%. However, they were outpaced by growth in the broader non-oil economy, which expanded by 4.4% overall, led by positive performances in community, social and personal services activities, transport, storage and communication activities, and wholesale, retail, restaurant and hotel activities.
According to Knight Frank, a global property consultancy, the value of Saudi construction output is projected to reach $182bn by end-2028, up from $142bn in 2023 – a 28% increase over five years. The firm attributes this to the country’s increased investment in building across multiple segments, including residential, institutional, energy and utilities. This growth is also being driven by the Kingdom’s portfolio of giga-projects – including the flagship NEOM project, a high-tech urban region currently under development, and Qiddiya, a planned tourism and entertainment destination – as well as construction targets of 660,000 new residential units, over 320,000 hotel rooms, 5.3m sq metres of retail space and 6.1m sq metres of new office space by 2030. To achieve these ambitions, the government is hoping to attract over $3trn in construction investment by 2030. The total budgeted value of real estate and infrastructure projects in the Kingdom since 2016 has reached almost $1.3trn. Residential projects accounted for the largest share in 2023, at 31% – or approximately $44bn, which Knight Frank expects will increase to $57bn by the end of 2028.
In terms of contract award value by destination, Riyadh accounted for 38%, with $54bn, in 2023. Makkah and Tabuk province follow, at around 20% each, with $28.7bn and $28.5bn respectively. Contract awards for construction account for 61% of the total, followed by transport (33%). India-based market research firm Mordor Intelligence forecasts that the Saudi construction market will register a 5.4% compound annual growth rate (CAGR) for 2024-29.
Materials
The momentum of the Kingdom’s Vision 2030 agenda continues to bolster the raw materials sector as large-scale construction projects continue apace. Cement sales were up by 12.5% year-on-year (y-o-y) in April 2024, reaching 2.9m tonnes, compared with 2.6m tonnes one year earlier, according to local investment bank Aljazira Capital.
However, the rising cost of materials has emerged as a key challenge. Consultancy firm Currie & Brown expects construction costs to increase by 5-7% during 2024, with inflation the main driver. After trailing off over the course of 2023, the price of cement, for instance, resumed an upward overall trend during the first half of the following year.
Saudi Arabia’s building materials supply has been bolstered by a deal between the NHC and CITIC Construction, a Chinese building firm. As part of efforts to secure supply chains for residential projects, in May 2024 the NHC announced that it had signed an agreement with CITIC to establish an industrial city and logistics zones for building materials, which will consist of 12 factories within the Kingdom. The NHC stated that the agreement would help to maximise the long-term economic and developmental impact of the sector and improve the overall quality of residential projects, as well as provide a boost to the local building materials industry.
Trends
The Middle East construction industry has benefitted from technology-driven enhancements to safety and project management. For example, Dubaibased WakeCap’s digital solution, which attaches to workers’ hard hats, gathers data on hours worked, hazards and progress – enabling real-time insights for improved site safety and workflow decisions.
Digital passport systems are increasingly being used to streamline workforce management, critical for large-scale developments like Saudi Arabia’s giga-projects. Meanwhile, new vehicle-tracking technology has reduced speeding violations by replacing points-based systems with continuous monitoring. Digitised toolbox meetings offer more consistent safety briefings, while AI-powered analytics are boosting project visibility and hazard detection.
Despite the increasing emergence of innovative technological solutions, however, challenges remain, particularly for recruitment and retention. The latest Global Construction Monitor from the Royal Institution of Chartered Surveyors (RICS) identifies Saudi Arabia as the world leader for construction activity, yet notes that progress is being hindered by a lack of both skilled and unskilled workers. Respondents cited skills shortages as a major problem, not only regarding the number of available workers, but also in terms of competency levels. According to the RICS monitor, over one-third of firms are struggling to find general labourers. Other challenges cited by respondents include rising costs, particularly for diesel, steel and cement, and localisation policies.
Major Projects
Saudi Arabia continues to invest heavily in construction projects as part of its drive to realise Vision 2030. The sector is a key industry within this agenda and has experienced significant growth as the development of mega-cities, the expansion of infrastructure, increasing urbanisation and a boost to tourism are all pursued by the government.
Neom
The largest project by investment value in the Vision 2030 agenda is NEOM – a sprawling, high-tech urban region currently under development in the north-west of the Kingdom. The project’s official cost is $500bn, but recent reports suggest that it could ultimately cost anywhere from $1.5trn to over $2trn. Covering an area roughly the size of Belgium and set to feature a wealth of futuristic design features and technologies, Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud intends for NEOM to be a showpiece that will transform the Saudi economy and revolutionise daily life. Official figures state that construction will consist of 90% prefabricated components and 85m tonnes of cement, with the city to be carbon neutral by 2030.
NEOM will consist of five regions: Magna, a coastal area offering luxury living and tourism, and situated within a nature reserve; Oxagon, an industrial centre strategically located to offer efficient and easy access to global supply chains; Sindalah, an island in the Red Sea, with a focus on sustainable tourism; Trojena, a mountainous region intended to serve as a destination for alpine sports; and The Line, a linear smart city. Official plans for The Line state that it will reach 500 metres above sea level, will be 200 metres wide, and will operate on 100% renewable energy. While initial plans had been for The Line to house 1.5m people by 2030, Bloomberg reported in April 2024 that this figure is likely to be around 300,000 and that the pace of development is being scaled back. However, that same month the minister of economy and planning, Faisal Al Ibrahim, rejected reports that NEOM project plans were being scaled back, stating: “the intended scale is continuing as planned. There is no change in scale.” Also in April, NEOM hosted a global contractor forum, at which officials briefed over 100 construction companies on the progress of development and highlighted future opportunities. Government figures suggest that NEOM’s construction workforce has surpassed 140,000, and is forecast to exceed 200,000 in 2025.
New Murabba
Also among Saudi Arabia’s Vision 2030 projects is the development of New Murabba, a new city district in Riyadh that will span 19 sq km. The centrepiece of the project is the proposed Mukaab, a large cube-shaped building that will house entertainment, dining and retail experiences. Upon completion it will be one of the largest structures in the world, standing at 400 cu metres in size. Marketed as Riyadh’s ‘human-first downtown’, the mission of New Murabba focuses on green spaces, sustainability and innovative technology – including over 60 areas dedicated to biodiversity, with 25% of the net area consisting of open spaces. Ultimately, the project is planned to provide 104,000 residential units, 9000 hotel rooms and 300,000 sq metres of retail space, contributing over $47bn to non-oil GDP.
In July 2024 the New Murabba Development Company, which is owned by the Public Investment Fund (PIF), the country’s sovereign wealth fund, announced that the project would be expanded further still, with the unveiling of plans for New Murabba Stadium, part of a drive to turn Riyadh into a global destination for sports and entertainment. Estimates by Knight Frank value the New Murabba giga-project at $50bn, with an expected completion date of 2030.
Qiddiya
The Qiddiya giga-project is a cornerstone of Saudi Arabia’s drive to expand its entertainment sector. Located 40 minutes from downtown Riyadh, Qiddiya City is a large-scale entertainment destination that is intended to house over 600,000 residents and receive an estimated 48m visitors per year. It will feature a wide range of attractions including theme parks, golf courses and hotels and, according to official estimates, will create 325,000 permanent jobs, with an additional 100,000 created during construction. Among its major attractions are an amusement park from the US-based company Six Flags, the first of its kind outside of the Americas, with official figures currently reporting a 75% completion rate by mid-2024, and a water park called Aquarabia, stated to be 71% complete. Knight Frank estimates the project to cost $9.8bn, with financing provided by the PIF. The government expects the project to contribute $36bn to GDP once it is fully operational.
Global Sports Tower
In July 2024 designs were approved for the Global Sports Tower, a landmark initiative of the broader Sports Boulevard Project. Launched in 2019 by King Salman bin Abdulaziz Al Saud, the Sports Boulevard in Riyadh is part of a commitment to improve the quality of life for residents and visitors to the capital city. It includes over 4.4m sq metres of greenery and open space, as well as up to 50 multi-disciplinary sports facilities. The project, which is part of a drive to establish a futuristic urban environment within Riyadh itself, also offers several distinct destinations and investment zones, covering an area of over 3m sq metres.
Standing at 130 metres tall, the Global Sports Tower reflects Vision 2030’s goal of creating a sustainable environment that enhances quality of life. It will have a total internal area of 84,000 sq metres, including facilities for ice hockey, tennis, basketball, baseball and indoor sky-diving. It will also boast the world’s tallest indoor climbing wall and its highest running track, located on the tower’s roof.
Residential Real Estate
According to Saudi Arabia’s 2024 budget, from the start of 2023 to the end of September that year the Real Estate Price Index increased by 0.8% y-o-y. Government figures also indicate that the index increased by 1.7% y-o-y in the second quarter of 2024, attributed to a 2.8% rise in residential real estate prices. Similarly, residential land prices increased by 2.8% y-o-y in the second quarter – although commercial real estate prices saw a 0.4% decline, impacted by a 0.4% decrease in commercial land prices. Prices for commercial buildings and centres remained stable. In the first six months of 2024, approximately 280,000 real estate transactions were recorded in Saudi Arabia, with a total value of over SR636bn ($170bn) and covering an area of over 2bn sq metres.
The government aims to increase home ownership to 70% by 2030, with substantial progress already registered towards this target (see analysis). Mordor Intelligence estimated that the Saudi real estate market was worth $70bn in 2024, expecting it to increase to $102bn by 2029, to register a CAGR of 8% over the five-year period. However, despite the widespread construction projects across the country, demand is outpacing supply. The shortage of quality stock is compounded by a rapidly expanding population: the most recent census in 2022 placed the overall population at 32.2m, up from 24m in 2010.
The residential sector in particular is thriving, with neighbourhoods in the key urban centres of Riyadh, Jeddah and Dammam seeing significant levels of transactions in recent years. In the 12 months to the second quarter of 2024, Riyadh recorded a 52% rise in transactions to register 18,500 property sales, totalling approximately SR27bn ($7bn), according to US-headquartered real estate firm CBRE. Compared to pre-Covid-19 levels in the second quarter of 2019, transaction volumes surged by some 56% in Riyadh, 67% in Jeddah and 50% in Dammam. Since the first quarter of 2020, Riyadh’s average villa prices have grown by 12% annually, with further gains expected as new high-quality stock enters the market amid ongoing supply constraints. In the apartment segment, average prices reached SR4971 ($1325) per sq metre in Riyadh and SR4027 ($1074) in Jeddah in the fourth quarter of 2024, while Riyadh’s rental transactions for apartments rose by around 6% in the 12 months leading to July 2024.
Also in July 2024, construction began on the Banan City project in Riyadh. A joint venture between the NHC and Talaat Moustafa Group (TMG), a local real estate conglomerate, the project is set to be a smart city covering 10m sq metres, and will provide a gated community to over 120,000 residents. The chairman of TMG, Hesham Talaat Moustafa, estimates the total investment cost at SR31.4bn ($8.4bn), with expected revenue of SR40bn ($10.7bn). Indeed, the NHC is pursuing a target of developing more than 300,000 housing units, with a value of SR250bn ($66.7bn), by 2025. In July 2024 the company signed a deal with China State Construction Engineering Corporation to construct an initial 20,000 units.
Leisure & Retail
As the government maintains its focus on expanding tourism under Vision 2030, leisure, retail and entertainment projects abound. These include Qiddiya and New Murabba Stadium, with a host of other projects also under development. The Red Sea giga-project is an expansive holiday destination along the west coast of Saudi Arabia. Wholly PIF-owned, and covering 28,000 sq km, its natural features include over 90 islands, beaches across 200 km of coastline, dormant volcanoes, desert dunes, canyons and the world’s fourth-largest barrier reef. Official figures state that upon completion in 2030 the project will provide 8000 rooms across 50 hotels, as well as 1000 residential properties. In addition, contracts worth $6.7bn had been signed by late 2024, with the government expecting the attraction to welcome 1m annual visitors.
Meanwhile, The Rig is an adventure tourism destination, located on offshore structures in the Gulf with a design inspired by oil platforms. As well as hotels and retail outlets, The Rig will provide a range of adventure activities both above and below the sea, including diving, extreme sports and an amusement park. Elsewhere, the Boutique Group – another Vision 2030 project, fully owned by the PIF – transforms historic palaces into ultra-luxury hotels while maintaining a focus on Saudi heritage and culture. Destinations feature art galleries, gardens and exhibitions.
Private companies are also making significant contributions to the sector. Local firm Al-Othaim Investment Company, a diversified group focused on commercial developments, currently holds an investment of over SR15bn ($4bn), which offers the potential to create 51,000 direct and indirect jobs. In July 2024 the company announced the launch of its Al-Othaim Cruise Hail project, located in Hail. The development is a multifaceted, cruise-ship-shaped leisure and entertainment outlet, with features set to include a large commercial mall spanning 118,000 sq metres, a five-star hotel, office space, a water park, a variety of restaurants and green spaces.
Riyadh’s retail stock is expected to expand from 3.6m sq metres in 2024 to 4.6m sq metres by 2026 – marking an increase of 28% – according to mid-2024 estimates by Knight Frank. Average rental rates in the capital increased by 3% to SR2725 ($726) per sq metre for both regional and super-regional malls in the 12 months leading up to July 2024, while occupancy rates in the retail market increased by five percentage points to 90%. “Saudi Arabia’s retail landscape holds great potential, especially as the government emphasises diversification under Vision 2030,” Meshaal bin Omairh, group CEO, Al-Othaim Investment Company, told OBG. “However, with this opportunity comes the challenge of rising competition and evolving consumer expectations.”
Nonetheless, retail market growth was more subdued in locations such as Jeddah and Dammam Metropolitan Area (DMA) in the same period, with occupancy rates dropping by 1% in each location, to 84% and 89%, respectively. Average rents in Jeddah decreased by 7% to SR2465 ($657) per sq metre and rates for regional and super-regional malls in DMA dropped by 3% to SR2275 ($607) per sq metre.
Outlook
Saudi Arabia’s construction and real estate sectors are primed for sustained growth, propelled by Vision 2030’s transformative agenda and a stable, investment-friendly environment. Construction demand remains robust, with opportunities for firms offering advanced technologies to boost efficiency and safety across the Kingdom’s many mega-projects, such as NEOM and Qiddiya.
In real estate, demand for residential, commercial and leisure spaces is expanding, driven by a rising population and initiatives to boost home ownership and diversify the economy. Regulatory reforms, including eased foreign ownership rules and tax adjustments, are further enhancing the sector’s appeal to investors. Together, these sectors are set to play a pivotal role in Saudi Arabia’s ongoing economic transformation, offering numerous opportunities ahead for both local and global stakeholders alike.
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