Tracking homeownership trends in Saudi Arabia offers important insights into the country’s economic progress and direction. A recent surge in these trends aligns with the projected 1.6 percent gross domestic product (GDP) growth for 2023, reflecting an economy on the upswing.
Over the years, the housing market in the Kingdom has developed into a competitive industry. The growth of the construction sector, which is considered to be one of the most important industries, has contributed greatly to this development.
Here, we delve further into the homeownership trends in Saudi Arabia.
The rising tide of homeownership
As the trend of homeownership rises, Saudi Arabia finds itself in the midst of a transformative phase. In 2020, a report from Statista revealed that 62 percent of Saudi residents were homeowners. This already high percentage pointed towards a prevalent culture of homeownership.
In addition, forecasts suggested an increasing trend, with an expected growth of homeownership in Saudi Arabia of 70 percent by 2030.
Moreover, Faisal Durrani, the head of Middle East Research at Knight Frank, estimates that homeownership rates hover around 67 percent to 68 percent currently. He further anticipates a rise in homeownership due to the increase in housing projects and sales.
Factors influencing homeownership trends in Saudi Arabia
Economic growth
As Saudi Arabia’s economy continues to grow, increasing household income levels translate into more people being able to afford homes. Strong economic performance also leads to higher consumer confidence and spending, which bolsters the real estate market.
Government initiatives
The Saudi government has introduced various initiatives and programs to encourage homeownership. For example, the Vision 2030 initiative targets raising the rate of homeownership to 70 percent by 2030.
Additionally, it aids the large-scale development of residential projects and contributes to increased homeownership rates in Saudi Arabia.
Read: Rising demand, cost of housing in Riyadh
Population growth
A steadily growing population creates a higher demand for housing in the country. In fact, Saudi Arabia’s population is projected to reach 37.98 mn by 2025 from 35.99 mn in 2020.
In addition, young Saudis entering the workforce seek to establish their own households, further driving the need for accessible and affordable homes.
Urbanization
In 2022, about 84.73 percent of Saudi Arabia’s population resided in urban areas, up from 79.85 percent in 2000. Consequently, this migration trend shows the growing demand for residential properties in urban areas.
Mortgage financing
The Saudi Arabia Monetary Authority reports that the country’s banks and financial institutions provided SAR79 bn for residential mortgages in just the first half of 2021. Interestingly, villas claimed 80 percent of these residential real estate loans, followed by 15.9 percent for apartments and the remaining for land purchases.
Furthermore, the Saudi Sakani program exceeded expectations in the first quarter of 2021 by aiding 70,000 families, surpassing its initial target of 51,000. These reflect the role of easily accessible mortgage finance and loans in expanding homeownership across Saudi Arabia.
Housing developments in Saudi Arabia
The housing landscape in Saudi Arabia is experiencing a dynamic and transformative phase. Several ambitious projects have been launched.
Firstly, the Red Sea Project stands out. Covering an expansive 28,000 square kilometers, this development plans to create 50 hotels with 8,000 rooms, 1,000 residential properties, and various leisure facilities.
Simultaneously, the Neom Project is another significant housing contributor. This $500 bn initiative envisions a high-tech, globally connected, eco-friendly city. The project has already seen nearly 20 percent of its infrastructure work completed.
Moreover, the $19.9 bn Jeddah Central Project incorporates landmarks, a marina, beach resorts, restaurants, and modern residential areas. This project is slated for completion across three phases, with the first phase accounting for 45 percent of the development and set for completion by the end of 2027.
Additionally, the $20 bn Diriyah Gate project plays an important role in homeownership trends in Saudi Arabia. With plans to contribute 20,000 homes to Riyadh’s residential stock by 2027, the project is highly significant in the real estate market.
Other noteworthy developments include Unified Development Company’s Esplanade project in Riyadh, a residential, dining, and retail hub epitomizing modern living.
Equally important is Kun Investment’s 11 West property in Jeddah. This mixed-use project offers high-quality housing, retail, and recreational spaces, reflecting the growing preference for integrated living communities.
Looking ahead
From all fronts, homeownership trends in Saudi Arabia will no doubt shape the nation’s future housing market. Looking forward, we anticipate sustained growth in homeownership that will make a pivotal contribution to Saudi Arabia’s economy.
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