Under the banner of its Vision 2030 programme – a far-reaching roadmap for economic diversification and modernisation – Saudi Arabia has set an ambitious target of 70% home ownership by 2030 and has enacted a comprehensive strategy to achieve this goal. The government’s proactive approach, underpinned by substantial public investment, market liberalisation and a host of supportive initiatives, has already yielded notable results, with home ownership rates rising and property development flourishing across the Kingdom in recent years. However, while significant strides have been made toward the 70% target, the rapid transformation of the sector has led to increased demand, which, in turn, has driven up property prices. This trend presents a challenge for affordability, potentially limiting access for many more price-conscious prospective buyers. Yet, as policymakers and regulators continue to refine their approach, there is a clear opportunity for balancing growth with inclusivity, ensuring that the benefits of this transformation are broadly shared across society and that home ownership remains within reach for a wide range of Saudi citizens.
Public Developments & Initiatives
As part of the Vision 2030 agenda, in 2018 the government launched the Housing Programme – its broader initiative for overhauling the sector, which aims to provide greater access to financing, simplify regulations and add a diverse range of real estate options to the market. According to the Housing Programme’s 2023 annual report, the home ownership rate in the Kingdom stood at 63.7% at the end of that year, up by 16.7% compared with 2016.
Within the Housing Programme, the government launched the Sakani initiative, also in 2018, which is designed to catalyse the participation of private developers to establish new communities in high-demand areas, as well as to provide financing solutions. Over 1m families have so far benefitted from Sakani support. In the first half of 2024, the Sakani programme reported an uptick in its reach, with 55,000 Saudi families benefitting from its housing initiatives – an 8% increase over the same period in 2023, when 51,000 families were assisted. Sakani’s mid-year 2024 report highlighted that over 44,000 families had transitioned into their first homes in the first half of that year, leveraging diverse housing solutions such as self-build options and ready-to-move-in homes. A critical component of Sakani’s success lies in its financial backing, which measured 51,300 financing contracts valued at SR5.3bn ($1.41bn) in the first half of 2024. These contracts are supported by the government’s Real Estate Development Fund, in collaboration with banks and financial institutions, to ensure sustainable funding streams for new homeowners. In addition, the programme has made strides in supporting low-income families, issuing over 27,000 subsidised mortgage loans in the same six-month period. Furthermore, 13,600 low-margin financing contracts with a competitive profit margin of 2.59% were provided to low-income Sakani beneficiaries over the period, underscoring Sakani’s commitment to making homeownership accessible for as broad a segment of Saudi society as possible.
Integrated Communities
In 2020 the government announced the launch of Roshm, a national real estate developer that is owned by the Public Investment Fund (PIF), the country’s sovereign wealth fund, and is tasked with building integrated communities for over 2.2m people by 2030. In September 2023 the company secured SR10bn ($2.7bn) in funding for its various projects. Among its targets, Roshn intends to develop over 400,000 homes, 1000 schools and over 700 mosques. Its initiatives include Sedra, a 20m-sq-metre community in Riyadh, launched in 2021, and the Alarous community in Jeddah, covering 4m sq metres and set to include 18,000 residential units. Another addition, Marafy, is a mixed-use development north of Jeddah that will eventually accommodate over 130,000 residents and include an 11-km, man-made canal.
In addition, the Saudi Real Estate Refinance Company (SRC), also owned by the PIF, was established in 2017 to contribute to the transformation of the Saudi housing market. The SRC provides liquidity and access to financing solutions for Saudi homebuyers. By December 2023 the SRC had injected SR50bn ($13.3bn) into the secondary market for residential real estate in the Kingdom.
Although there are no property taxes in Saudi Arabia, there is a so-called white land tax (WLT). Broadly, WLT is levied by the Ministry of Housing on owners of urban land that is designated for residential or commercial use but is considered to be unexploited or undeveloped. This is an annual tax rated at 2.5% of the land’s value that is applicable to land that is, among other criteria, vacant and within the limits of the urban boundary. The initiative was established in 2015, with the intention of boosting the supply of land available for construction.
Foreign Ownership
Saudi Arabia has been revising its approach to non-Saudi property ownership within the country, with a view to opening up the market to wealthy foreigners. This is a significant pivot from the Kingdom’s traditional stance, in which foreign ownership of property was strictly regulated and restricted. At the start of 2024 the government expanded its premium residency visa programme to include a real estate owner residency category, in an effort to attract more foreign investment and contribute to its economic diversification goals. The visa requires a minimum investment threshold of SR4m ($1.1m) in a residential property, which must be fully developed. This measure is designed to ensure that investment channelled into the market is significant, with the potential to drive up demand for luxury and high-end properties and, therefore, raise property values. As a result, some analysts expect that developers might eventually respond by expanding their portfolio of high-end projects.
Demand Surges
The various initiatives put in place for local and foreign residents have led to a significant increase in demand, with supportive programmes making mortgages more readily available to Saudi nationals. Another crucial factor behind the rapid rise in interest in the Kingdom’s housing market is the introduction and legislation of off-plan residential sales, a development that has accelerated homeownership rates beyond the pace of new home construction. Demand has increased among local communities as well as expatriates, with locals showing greater interest in the country’s cities, particularly Riyadh and Makkah, and expatriates tending to favour Saudi Arabia’s many new giga-projects.
“The Kingdom’s growing population and expanding middle class are fuelling demand for high-quality real estate, particularly in key urban areas,” Feras Albanyan, CEO of Aqalat, told OBG. “Moving forwards, real estate developers must adapt to shifts in consumer preferences, including a greater emphasis on smart technologies and sustainability.”
As expected, rising demand has led to increased prices in recent years and this has, as a result, impacted affordability. Figures published in a survey by Knight Frank, a real estate consultancy, indicate a 16% decrease in overall transactions in 2023 compared to the previous year. Mortgage affordability has also become an increasingly pressing issue that the government is working to address. Total mortgages issued saw a 35% drop in 2023, which can partly be attributed to high interest rates. However, the decline in property sales triggered a price correction across the country – with the capital city of Riyadh a notable exception. Knight Frank’s figures suggest that the average price of nationwide residential property sales dropped by as much as 16% in 2023 compared to the previous year.
Prospects
While Saudi Arabia has already made substantial progress towards its 70% homeownership target, the transformation of the residential real estate sector has generated significant interest from both prospective homeowners and from major institutional investors. This heightened demand, combined with rising mortgage costs, has influenced affordability, posing a potential challenge for new – and especially first-time – buyers. However, Saudi authorities have shown a proactive approach to addressing these dynamics, suggesting that solutions to balance affordability with demand may well emerge as development continues. Achieving the homeownership target will depend not only on price adjustments but also on a steady flow of new projects to meet market needs. With ongoing efforts to expand and diversify the real estate pipeline, there is reason to be optimistic that the Kingdom’s commitment to sustainable and accessible housing will help Saudi Arabia achieve its ambitious goals and foster a thriving property market in the years to come.
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