RIYADH: Saudi Arabia is poised to draw $6.3 billion in private international capital into its property sector once the ongoing geopolitical conflict in the Middle East region stabilizes, driven by strong structural demand drivers, according to Knight Frank.
In its latest report, the real estate consultancy stated that factors including population growth, business expansion, and inward migration, as well as rising consumer confidence, are supporting the country’s property market, despite the recent conflict in the region.
The Kingdom is balancing the immediate impact of the Iran war with a longer-term push to internationalize its real estate sector, as regulatory reforms and strong demographic demand underpin expectations for renewed foreign investment.
The conflict has slowed non-oil activity, including property markets, across Gulf Cooperation Council countries amid heightened regional uncertainty.
“Notwithstanding the human and economic costs of the Middle East conflict, GCC governments have moved swiftly to demonstrate a heightened level of security and resilience, showcasing their defensive capabilities to reinforce the long-term stability the region has maintained for decades,” said Faisal Durrani, partner – head of research for Middle East and Africa at Knight Frank.
He added: “More importantly, long-term loyalty and confidence of expats in GCC governments have been shaped by decades of investment in public wellbeing and residents’ welfare.”
Even though near-term investment activity in Saudi Arabia’s real estate sector may slow as investors reassess risks, long-term fundamentals remain robust, the report said.
Saudi Arabia’s Real Estate General Authority expects the Kingdom’s property market to reach $101.62 billion by 2029, with an anticipated compound annual growth rate of 8 percent from 2024, as the Kingdom diversifies its revenue stream beyond oil.
On Jan. 22, Saudi Arabia opened its property market to non-resident international buyers for the first time, which Knight Frank described as a “landmark moment.”
The new law allows foreign ownership in 170 designated areas, boosting potential in high-demand cities such as Riyadh, Jeddah, and Makkah, as well as Madinah.
“The new ownership law could inject fresh capital, boost liquidity and attract a diverse international investor base,” said Susan Amawi, general manager of Knight Frank in Saudi Arabia.
Among potential investors, 55 percent of those with personal wealth exceeding $3 million are willing to spend more than $2 million on a residential property in the Kingdom.
Some 36 percent of Saudi-based expatriates expect to spend less than $500,000 for a residential property purchase.
Knight Frank’s research shows that Riyadh is the top choice for 55 percent of global investors among Saudi cities, followed by Jeddah at 46 percent. Madinah ranks third with 43 percent interest, while Makkah stands at 41 percent and Dammam at 22 percent.
