SNB Capital flags sectors to be impacted by landlord-tenant regs

Riyadh city

SNB Capital said that the regulatory provisions governing the relationship between landlords and tenants will help curb inflation and positively impact households’ income, expecting the retail sector to be the main beneficiary, while REITs and selected real estate companies will be negatively affected.

In its report, the company added that the comprehensive real estate reforms will stimulate property development, increase the supply of residential, commercial, and office units, and restore prices to normal levels in Riyadh. It also believes that these reforms complement each other to achieve the desired outcomes.

With the rising cost of land ownership, along with the freeze on rental prices, land hoarding and speculative practices are expected to decline significantly, according to the research firm.

SNB Capital also expects an overall negative impact on real estate developers, property owners, and REITs that hold major leased assets in Riyadh. Meanwhile, it expects a generally positive impact on the retail, fuel stations, and car rental sectors, as rental contracts and related costs are likely to decrease relative to overall revenues.

It pointed out that the freeze on retail rents will provide an opportunity to improve valuations due to lower net debt, as a result of the reduced present value of future obligations and slower growth in rental payments (as part of cash flow).

The Saudi Cabinet has recently approved the regulatory provisions governing landlord–tenant relations. The move was taken in line with the directives previously issued by Crown Prince Mohammed bin Salman to implement a package of new regulatory measures for the rental market in Riyadh. Under these regulations, all residential and commercial rental contracts—existing or new—within Riyadh’s urban boundaries are subject to a five-year freeze on annual rent increases, effective Sept. 25, 2025, according to Argaam’s data.