Saudi Arabia’s residential market is expected to recover in the short to medium terms as ongoing efforts for diversification and regulatory initiatives to stimulate the sector started to come into effect, according to a recent report by Knight Frank.
In the medium term, the implementation of various urban regeneration initiatives, including mixed-use communities and infrastructure projects, will act as a catalyst for a more active residential market over the coming period.
“In the first half of 2019, prices appear to have remained under pressure while transactions volumes have picked up significantly across the key cities, indicating that the market may be heading towards the bottom of its cycle,” Knight Frank said.
In Riyadh, sale prices of apartments and villas dropped 6 percent and 2 percent year-on-year (YoY) in Q2 2019, respectively.
|
Annual Change in Apartment, Villas Prices in Riyadh |
||
|
Period |
Apartments |
Villas |
|
2017 |
(16%) |
(10%) |
|
2018 |
(14%) |
(5%) |
|
Q1 2019 |
(10%) |
(5%) |
|
Q2 2019 |
(6%) |
(2%) |
“Furthermore, we expect falling household sizes to underpin demand for higher density development providing smaller and more efficient units that are affordable due to a reduction in size rather than build quality,” the report added.
Riyadh’s urban boundaries have witnessed remarkable expansions over the last five decades with the majority of developments currently taking place beyond King Salman Road as the city is growing in a northerly direction, due to the availability of land plots away from the city center.
In Jeddah, sale prices of apartments and villas decreased 8 percent and 5 percent year-on-year (YoY) in Q2 2019, respectively.
Oncoming supply in Jeddah is being mostly geared towards middle-income housing as northern Jeddah is increasingly seeing the majority of development activity.
“This will prompt further lifestyle focused developments and urban growth to the north of the city over the next couple of years, as land availability remains restricted,” the London-based consultancy firm added.
|
Annual Change in Apartment, Villas Prices in Jeddah |
||
|
Period |
Apartments |
Villas |
|
2017 |
(11%) |
(12%) |
|
2018 |
(16%) |
(6%) |
|
Q1 2019 |
(11%) |
(7%) |
|
Q2 2019 |
(8%) |
(5%) |
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