The UAE-based proptech company Realiste which develops products for real estate investing powered by artificial intelligence (AI), conducted research on the property market in Riyadh, the capital of Saudi Arabia. The local property prices will increase on average by 19 percent, with expected growth of 20-30 percent in particular areas.
Factors behind the growth
Over the past few years, real estate has emerged as a top priority for the local government in response to the swiftly changing demographics of Saudi Arabia. The country’s population has surged by more than 20 percent from 1970 to 2020, with over half of its citizens under 30. Many of these young people migrate from rural areas to cities for employment. Riyadh is expected to see the addition of 100 000 new homes by the end of 2023.
To reduce the country’s reliance on revenue generated from oil, the local government is also pursuing its Vision2030 plan, which aims to transform the country’s economy. This plan, combined with the increasing demand for housing, has spurred investments in several new futuristic cities. By 2030, the Kingdom plans to build eight new megapolises, including Neom, Qiddiya, Red Sea Project, Amaala, Al-Ula, Diriyah Gate, and others. Investment in these projects accounted for almost $575 billion. This funding will allow the development of 1,3 million housing units.
To attract foreign investment, Saudi Arabia is also easing regulations towards expats. Since 2021, they have been allowed to purchase a single property. And currently, The Kingdom’s Real Estate General Authority is working under a new system for foreign ownership of real estate that will allow outlanders to purchase real estate of all kinds, including commercial, residential, and agricultural.
The construction boom in Saudi Arabia has impacted property prices in Riyadh. According to data from Realiste’s AI, property prices have risen by 9 percent in the past six months, with some districts seeing increases of up to 60 percent.
Notably, the districts of Al Naseem and Al Hamra have experienced the most growth, with a 56 and 52 percent price increase, respectively. Al Nakheel has also seen a significant rise of 40 percent. Other districts in the top five for growth over the same period include Hijrat Laban (26 percent) and Al Nafil (25 percent).
Currently, the most expensive areas of Dubai are Al Nakheel, Al Rabee, and Al Malga with average property prices ranging from 7962 Saudi riyals to 10254 Saudi riyals per square meter.
The most affordable housing options are located in Al Badi’ah, Al Dar Al Baida, and Al Shifa, Realiste’s AI reveals.
Forecast for 2023
According to Realiste’s data, property prices in Riyadh will grow by 19 percent by the end of 2023. However, some areas will see a more significant increase. The top-growing neighborhood is Al Hamra, located in the northeastern part of the city. The area hosts many sites and local landmarks, such as Al Hamra’a Park, Al Hokair Land, Star City Park, Al Marsa Resorts, Riyadh Najed Schools, Sanad Hospital, Jarir Bookstore, and The Water Splash.
The top 10 most rapidly growing residential areas of Riyadh also include At Taawun, located adjacent to Al Nakheel Mall, one of the biggest malls in Saudi Arabia, and suburbian Al Qadisiyyah and Hijrat Wadi Laban, among others.
‘We see more interest in the Saudi market from investors. We also expect that those who will buy 10, 20, apartments in Saudi and leave it for five years, will be able to come back and see them grow by 100, 200 percent over that period,’ says co-founder of Realiste Alex Galtsev.