Roughly five years after the launch of the Kingdom’s National Transformation Plan (NTP), a key part of the Saudi Arabia’s Vision 2030 social and economic masterplan, Saudi is seeing major initial progress in the real estate sector, with new residential mortgages soaring 1000% since 2016, according to a report from industry powerhouse KnightFrank.
“Saudi Arabia’s real estate market has blossomed, with further exponential growth expected,” according to the latest analysis by global real estate consultant Knight Frank.
Knight Frank is tracking close to US$ 1 trillion worth of real estate and infrastructure projects that have been announced in the wake of the National Transformation Plan and this is only a third of the total US$ 3.2 trillion of spending that is planned. So far this includes 8 giga projects and new super cities, including the cutting edge US$ 500 billion NEOM and the spectacular new $20 billion Diriyah Gate neighborhood in Riyadh that promises to transform luxury living in the capital, Riyadh, the company said.
“The momentum injected into the national property market is best reflected in the fact that at over 150,000, the number of residential mortgages issued in H1 2021 is more than ten times the level registered in H1 2016. Clearly, the government is delivering on its pledge to improve access to world-class housing for all and is doing so in style,” Faisal Durrani, partner and head of middle east research, Knight Frank, said.
Saudi Arabia has embarked on a number of significant and impactful reforms in both the residential and commercial real estate sectors since the launch of Vision 2030 under King Salman and Crown Prince Mohammed bin Salman.
Among these is the creation and enactment of a so-called “white land tax,” which taxes the owner of unused and undeveloped land in Saudi Arabia at 2.5% of its value, encouraging the owner to develop the land or sell it. Saudi authorities have also set up several government organizations and bodies to encourage lending to new homeowners and ensure enough residential supply is hitting the market to meet the demands of its residents. Saudi Arabia also recently began to allow foreigners to own a single property in the Kingdom.
“What we’ve seen happen over the last five years has been nothing short of incredible. The lightning speed at which reforms are being implemented and the pace at which giga real estate projects are rising is just the tip of the iceberg. We are witnessing the emergence of what looks set to be one of the hottest new real estate markets in the world,” Durrani said.
By 2030, Knight Frank anticipates the completion of more than 1.3 million residential units, in excess of 3 million square metres of new office space and over 100,000 hotel rooms across Saudi Arabia.
