Saudi Arabia: Saudi Arabia’s real estate market maintained its steady growth in the second quarter of the year, with overall property prices in the Kingdom witnessing a 3.2 percent year-on-year rise, official data showed. 

Commercial real estate prices recorded an annual increase of 11.7 percent in the second quarter, while expenses for residential properties saw a marginal rise of 0.4 percent, according to the latest report by the Kingdom’s General Authority for Statistics. 

Strengthening the real estate sector is one of the crucial goals outlined in Saudi Arabia’s Vision 2030 agenda, as the country continues to diversify its economy away from oil and position itself as a global business and tourist destination. 

The Real Estate General Authority expects the property market to reach $101.62 billion by 2029, with an anticipated compound annual growth rate of 8 percent from 2024.

“Data indicates that commercial real estate prices recorded an annual increase of 11.7 percent in the second quarter of 2025, compared to the same quarter of the previous year. The sector accounts for 25.4 percent of the index,” said GASTAT. 

“This increase is associated with a 12.7 percent rise in commercial land plot prices, which represent 22.8 percent of the index,” it added. 

Commercial building prices witnessed a year-on-year rise of 2.7 percent in the second quarter, while shop and gallery prices rose by 4.1 percent, the authority said. 

In June, global real estate consultancy Knight Frank also underscored the growth of Saudi Arabia’s commercial real estate sector. It said rents for Grade A office spaces in Riyadh reached SR2,700 ($719.95) per sq. meter by the end of the first quarter, representing a rise of 23 percent compared to the same period in 2024. 

Knight Frank added that government-led initiatives, including the regional headquarters program, are driving the expansion of the commercial real estate sector in the Kingdom. 

Saudi Arabia’s regional headquarters program offers benefits to international firms, including a 30-year exemption from corporate income tax, a waiver of withholding tax on headquarters activities, and discounts and support services.

GASTAT said residential land prices recorded an annual growth rate of 0.2 percent, while villa and residential floor prices rose by 3.2 percent and 1.5 percent, respectively. 

Apartment prices decreased by 0.7 percent in the second quarter, compared to the same period in the previous year. 

Quarterly comparison

According to GASTAT, Saudi Arabia’s real estate price index increased by 0.1 percent in the second quarter, compared to the previous three months. 

The authority said the growth was driven by a 7.9 percent rise in commercial real estate prices, including an 8.6 percent increase in commercial land plot prices and a 3 percent rise in building prices.

Agricultural sector prices increased by 1.7 percent quarter on quarter, in line with a 1.7 percent rise in agricultural land prices.

The annual rate of change of the real estate price index slowed in the second quarter of this year compared to the first quarter, due to slower growth in the residential sector. 

“The real estate price index in Saudi Arabia recorded an annual rate of change of 3.2 percent in the second quarter of 2025, compared to 4.3 percent in the first quarter of the same year. This change is associated with slower growth in the residential sector, which has the highest relative weight in the index,” said the authority. 

The report added that residential real estate prices declined by 2.6 percent in the second quarter compared to the previous three months. 

GASTAT said residential land prices decreased by 4 percent, while expenses for apartments and residential floors dropped by 1.2 percent and 0.9 percent, respectively. 

Villa prices rose by 1.8 percent in the second quarter compared to the first quarter. 

In April, a report released by S&P Global said Saudi Arabia’s retail real estate market is poised to increase in the near term, driven by population growth, expanding tourism, and economic diversification efforts under the Vision 2030 initiative. 

The credit rating agency added that ongoing mega-projects and the expansion of international brands are expected to propel further demand for retail space across the Kingdom.

Regional trends

GASTAT said overall real estate prices in the Eastern Province region witnessed an annual increase of 4.2 percent in the second quarter, followed by the Makkah region at 3.9 percent, and the Riyadh region at 3.6 percent. 

In the first quarter, the Riyadh region recorded a higher annual rate of change of 10.7 percent, in terms of real estate prices.