Real estate market expectations in Saudi Arabia for the year 2024

Questions are increasing about the future that the Saudi real estate market holds as we approach the year 2024, as the real estate market in the Kingdom of Saudi Arabia is considered a vital hub that reflects the state of the economy and urban development in the country.

Reports issued by” JLL” indicate that the real estate market in the Kingdom of Saudi Arabia witnessed an improvement in 2023 AD after a slowdown in 2022 AD due to the Covid-19 pandemic, as the residential sectors recorded a 6.2% increase in sales volume and a 2.7% increase in real estate prices in 2023 AD, the office sector saw a slight improvement in occupancy rates and rents, while the commercial sector remained stable.

While the hotel sector witnessed a strong recovery, with hotel occupancy rates increasing by 45% and average daily room rates increasing by 12% in 2023.

Economic indicators

The Kingdom of Saudi Arabia is considered one of the strongest countries in the global economy, and economic forecasts for the year 2024 AD show the continuation of this sustainable growth, as the International Monetary Fund expects that the Kingdom’s economy will witness a growth of 4.8% next year, after recording a growth of 3.1% in 2023 AD. These numbers reflect optimism for a bright future and continued growth within the framework of Vision 2030.

Economic growth:

The Kingdom of Saudi Arabia's economy will witness a tremendous growth of 4.8% in 2024, highlighting the country's economic strength and resilience.

Inflation:

The inflation rate is expected to rise to 2.5% in 2024, compared to 1.9% the previous year. This increase reflects improving economic conditions and increased spending.

Unemployment rate:

Expectations indicate that the unemployment rate will decrease to 11.7% in 2024, a significant improvement from the rate of 12.4% in 2023, and this improvement is due to continued investments and diversification of the economy.

Shifts in population composition and growth

Population growth in the Kingdom of Saudi Arabia is one of the main pillars of the growth of the real estate market, as the increase in demand for various residential units, including apartments, villas, and other residential units, leads to the expansion of urbanization and the construction of new residential complexes, and this trend is expected to continue in 2024 AD, which It paves the way for great investment opportunities in various housing sectors.

As for statistics, the expected population in the Kingdom of Saudi Arabia is estimated at 37.3 million people in 2024 AD, compared to 2023 AD, which was estimated at 36.6 million people. The urbanization rate is expected to reach 86.5% in 2024, up from 85.9% in 2023. It is also expected that the average family income will rise from $24,800 in 2023 to $26,100 in 2024.

The real estate market is rising

Cumulative data and economic analyzes indicate that the Saudi real estate market will witness a noticeable increase in 2024, benefiting from the stability of economic conditions and the rise in consumer confidence indicators. This is due to several prominent aspects, including increasing population growth and government reforms that contribute to attracting foreign and local investments, and enhancing transparency. In real estate transactions.

Impact of government reforms

The government of the Kingdom of Saudi Arabia is making great efforts to support the real estate market by implementing many policies and programs, including a housing program that aims to provide housing units at affordable prices for citizens, the Real Estate Development Fund that provides subsidized loans to buyers, and the white land tax that encourages the development of empty lands. It has implemented structural reforms such as allowing property ownership for residents in specific areas, easing visa laws and opening new sectors for investment.

Supply and demand dynamics

Housing supply is expected to increase by 2.4% in 2024, reaching 6.8 million units, while demand is expected to grow by 3.1%, reaching 7.1 million units. This indicates a gap between supply and demand of 300,000 units, which could impose pressure Prices and rents are rising, and with regard to commercial space, the supply for offices is expected to increase by 1.8% in 2024, reaching 21.2 million square metres, while demand is expected to grow by 2.2%, reaching 20.8 million square metres, and this It indicates a slight surplus of 400,000 square meters which may keep rents stable or reduce them slightly.

Investment trends

It is expected that foreign direct investment in the real estate sector will increase by 10% in 2024, reaching $12 billion, compared to 2023, which was estimated at $10.9 billion, as the most important sources of investment come from countries such as the United Arab Emirates, Kuwait, Bahrain, and the United States. The main sectors benefiting from this investment are the residential, hotel, and industrial sectors, which indicates the increased attractiveness of the Saudi market for foreign investors thanks to changes in property laws that allow them to own property in selected areas and benefit from the same rights granted to citizens.

Interest rates

As for interest rates, and according to the global trend towards monetary tightening, interest rates are expected to rise slightly in 2024 AD. The repo rate of the Saudi Central Bank is expected to rise from 1.5% in 2023 AD to 1.75% in 2024 AD, while it is expected that The reverse repo rate increases from 1% in 2023 to 1.25% in 2024. The average mortgage rate is expected to increase from 5.2% in 2023 to 5.4% in 2024. So slightly higher interest rates may impact some buyers' ability to afford a mortgage, but they may also encourage more savings and investment in property.