A Surge in Saudi Real Estate: Transaction Values and Market Dynamics

In the first half of 2025, Saudi Arabia’s real estate sector has shown impressive growth, marked by significant increases in both transaction values and volumes. The total transaction value hit approximately SR3.4 billion (around $906 million), reflecting a robust 49% rise compared to the same period in 2024. This prosperity in the market indicates a renewed investor confidence and heightened demand from end-users.

Dominance of the Housing Sector

Across the nation, the housing sector has emerged as the primary force driving real estate transactions. It constitutes around 63% of the total transaction value, which stands at SR123.8 billion ($32.96 billion) in the first half of 2025. Residential transactions saw a year-on-year increase of 7%, reaching nearly 93,700 transactions and a total monetary value of SR77.5 billion ($20.6 billion).

Factors contributing to this momentum include increased mortgage activity, government initiatives, and the delivery of new housing projects in key urban areas. Faisal Durrani, Head of Research for the MENA region at Knight Frank, highlighted a key legislative change—the approval of a new law regulating real estate ownership for non-Saudis, effective from January 2026. This development, along with mortgage reforms and improved housing supply, is expected to boost market liquidity and positively influence investor sentiment.

Riyadh’s Market Adjustment

Riyadh, Saudi Arabia’s capital, is experiencing a phase of recalibration after years of sustained growth. In the first half of 2025, transaction volumes in Riyadh fell by 31% year-on-year, with values dropping 20% to SR29 billion ($7.71 billion). Yet, prices continue to climb. The average apartment prices in Riyadh increased by 10.6% in Q2 2025, now sitting at SR6,175 ($1,642) per square meter, with particular gains seen in districts near the new Riyadh Metro.

Areas like Al Taawun observed a staggering 32% increase in prices, reaching SR9,470 ($2,518) per square meter. The King Abdullah District also experienced a rise, with values increasing by 17% to SR7,656 ($2,035) per square meter. Villa prices followed suit, averaging SR5,470 ($1,456) per square meter as of the same period, representing an 8.2% year-on-year increase. Northern Riyadh remains the priciest area for villas, priced at SR8,660 ($2,306) per square meter.

Harmen De Jong, Regional Partner at Knight Frank, remarked on Riyadh’s vitality, citing ongoing Vision 2030 initiatives and substantial infrastructure investments as core drivers. The upcoming foreign ownership law is expected to invigorate the market further, enhancing liquidity and development quality.

Jeddah’s Rising Appeal

Contrasting with Riyadh, Jeddah’s real estate market is experiencing notable growth. Transaction volumes have risen by 19%, while total transaction values surged by 28%, reaching SR17.3 billion ($4.6 billion). Average apartment prices grew by 2.7% to SR4,324 ($1,150) per square meter, particularly flourishing in the central and western districts. Villa prices also saw a 3.2% increase, averaging SR5,040 ($1,341) per square meter, led by northern districts.

Master-planned communities, such as Roshn’s Al-Arous, are drawing attention due to their lifestyle-oriented designs and urban planning, especially in appealing coastal settings.

Holy Cities: A Mixed Landscape

The holy cities of Makkah and Madinah are experiencing varied shifts in the property market. In Madinah, transaction values climbed by 49% to SR3.4 billion ($906 million), accompanied by a 38% increase in deal volumes. Average apartment prices rose slightly by 2.5% to SR3,835 ($1,020) per square meter, though villa prices dipped marginally to SR3,500 ($933) per square meter.

Conversely, Makkah saw transaction values drop by 33%, even as deal numbers increased by 11%, signaling a shift towards smaller, more affordable housing options. Average apartment prices in Makkah eased slightly by 0.5% to SR3,650 ($973) per square meter, while villa prices increased by 0.4% to SR3,420 ($913) per square meter.

Amar Hussain, Associate Partner for Research at Knight Frank, emphasized the transformative impact of government-backed projects in both cities. In Makkah, the Masar Destination initiative is creating new mixed-use zones close to the Haram, while in Madinah, the Rua Al Madinah project is set to introduce new hotels, cultural landmarks, and improved connectivity. These developments aim to elevate urban experiences in these cities, bolstering their appeal to residents and pilgrims alike while supporting broader tourism and economic strategies.