Saudi Arabia’s real estate market continues its upward trajectory this year with a substantial increase in the number of delivered residential units (27,500) in Riyadh and Jeddah in H1 2024, according to a new survey by JLL.
The residential and hospitality sectors stood out for their strong performance, supported by infrastructure development, strategic government-backed initiatives, tourist visas introduction, expansion of entertainment offerings, and the promotion of sports and new experiences to position the oil-rich kingdom as a global leisure destination.
The consultancy’s latest KSA Real Estate Market Dynamics Report found that residential sale prices saw a 10% year-on-year increase in H1 in Riyadh while average rents grew by 9% annually. In Jeddah sale prices rose by 5% and rents increase 4% year-on-year during the period under review.
The surge in demand for residential units, driven by the younger generation’s preference for independent living arrangements, has prompted an innovation wave in housing design.
The hospitality sector also experienced impressive growth in H1 2024 with average occupancy rate increasing by one percentage point and average daily rate (ADR) increasing by 7%, which resulted in its revenue per available room (RevPAR) increasing by 8%.
“Looking ahead to 2024, the key themes in KSA’s real estate sector will revolve around a focus on priorities, alignment, and collaboration between government projects. Effective engagement with the private sector will also be crucial, along with strategic talent management for sustainable growth. These initiatives will enable us to drive progress, foster innovation, and unlock the full potential of the kingdom’s real estate industry,” Saud Alsulaimani, Country Head, KSA at JLL, said.
However, given the scale of development, developers are facing challenges such as increasing land costs, particularly in Riyadh, volatile construction costs influenced by global economic headwinds, capacity constraints in the local market, increasing shipping costs, and high costs of financing.
