Saudi Arabia: Saudi Arabia’s real estate inflation slowed to 1.3 percent in the third quarter of 2025, driven by a softening residential market that offset stronger commercial sector gains, official data showed. 

According to the General Authority for Statistics, the annual increase in the real estate price index decelerated sharply from 3.2 percent in the previous quarter, with the index rising to 103.9 from 102.6 a year earlier. 

The residential sector, which carries the greatest weight in the index, fell 0.9 percent year-on-year, led by a 1.7 percent drop in apartment prices. 

This follows the government’s efforts to cool surging property prices, particularly in Riyadh. 

In September, Saudi Arabia’s Cabinet introduced new regulations to stabilize rents in the capital, including a five-year freeze on increases for residential and commercial properties within the city’s urban boundaries, effective Sept. 25. 

The move came after an April decision to raise the annual fee on undeveloped land from 2.5 percent to as much as 10 percent of its value, under Cabinet-approved reforms — White Land Tax Law — aimed at correcting market imbalances. 

In its latest report, GASTAT stated: “The real estate price index experienced a quarterly decline of 1.1 percent during Q3 of 2025 compared to the previous quarter.” 

It added: “The quarterly real estate index was affected by a 1.1 percent decrease in the residential sector, driven by declines in residential land prices by 0.8 percent, apartment prices by 1.1 percent, and villa prices by 2.5 percent.” 

During the third quarter, villa prices increased by 0.2 percent year on year, while prices for residential floors rose 0.3 percent. 

Commercial sector 

The commercial sector continued to strengthen, with prices climbing 6.8 percent, driven by a 7.2 percent surge in commercial land values amid tight supply and strong demand for office space in Riyadh and Jeddah. 

Strengthening the real estate sector is a key pillar of Saudi Arabia’s Vision 2030 agenda, as the Kingdom seeks to diversify its economy away from oil and establish itself as a global hub for business and tourism. 

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. 

“The commercial sector, which holds a weight of 25.4 percent in the index, recorded a 6.8 percent increase, driven primarily by a 7.2 percent rise in the prices of commercial land, which constitutes 22.8 percent of the index weight,” stated GASTAT. 

It added: “Additionally, the commercial sector recorded price increases of 3.3 percent in buildings and 1.1 percent in showrooms,”  

A separate report by JLL last month noted steady growth in Saudi Arabia’s commercial real estate market, with prime office rents in Riyadh climbing 7.3 percent year on year in the second quarter of 2025 to SR3,630 ($967) per sq. meter. 

According to JLL, the sharp rise reflects tight supply and robust demand, particularly in Riyadh and Jeddah, as the Kingdom advances its Vision 2030 diversification drive and Regional Headquarters Program to attract multinational firms. 

The GASTAT report noted that overall prices in the commercial real estate sector decreased by 1.6 percent, influenced by a 1.8 percent decline in commercial land prices and a 0.5 percent drop in showroom prices. 

It added that prices for commercial buildings increased by 1 percent year on year in the third quarter of 2025. 

Real estate prices in the agricultural sector rose 7.3 percent in the third quarter compared to the previous three months. 

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

The agency added that ongoing mega-projects and the entry of international brands are expected to further boost demand for retail space. 

The Riyadh region experienced a deceleration in real estate price growth, with an increase of 1 percent compared to 3.6 percent in the second quarter of 2025.