Knight Frank: Saudi residential market posts sharp slowdown in Q1 2026

Riyadh city

Saudi Arabia’s residential real estate market recorded a sharp slowdown in activity during the first quarter of 2026, according to Knight Frank.

The consultancy said transaction volumes fell 50% year-on-year (YoY) to 29,490 deals, while transaction values declined 57% to SAR 22 billion.

The slowdown was most pronounced in Riyadh, where transaction volumes and values dropped 82% compared with the same period a year earlier. Weaker activity was also recorded in Jeddah, the Dammam Metropolitan Area, Makkah and Madinah.

Knight Frank attributed the performance to mounting housing affordability pressures and weaker mortgage demand, while negative sentiment stemming from the regional conflict also weighed on demand.

Despite subdued transaction activity, residential prices continued to increase across most major markets.

Apartment prices in Riyadh rose 6.3% year-on-year in Q1 2026, while villa prices increased 4.9%. Apartment prices also advanced 2% in Jeddah and 2.3% in the Dammam Metropolitan Area.

Knight Frank said the gains reflected price resilience during January and February before the impact of the regional conflict intensified, adding that the full effect of these developments has yet to be reflected in aggregate transaction data.

Knight Frank said the National Housing Co. remains the primary driver of residential supply growth in the Kingdom through the development and delivery of integrated housing communities across multiple regions.

Riyadh office market remains resilient

Meanwhile, the Kingdom’s office market continued to show strong fundamentals during Q1 2026, particularly in Riyadh.

Knight Frank attributed the strength to sustained occupier demand amid a limited supply of high-quality institutional office space.

Office supply set for expansion

Knight Frank expects the office market to enter a new phase over the coming years as major office developments currently under construction are delivered.

According to Knight Frank, the expansion will provide tenants with greater choice while supporting the Kingdom’s long-term economic growth objectives.