Saudi Edition 
Egypt Edition 
UAE Edition 
MENA <> India Corridor 
Logistics (MENA) 
Climate (MENA) 
Share
The Kingdom’s residential real estate market is set to expand in 2025 despite rising prices, S&P Global said in a recent note. Demand will be sustained by government support, strong economic activity, and rising tourism, while the premium residency visa is expected to add after gaining some traction. However, affordability pressures, execution risks, and broader macroeconomic challenges — including high interest rates — remain key concerns.
Rising prices and rents push demand for mortgages: Residential prices have surged on strong demand and government-backed financing initiatives, like the Saudi Mortgage Guarantees Services Company (Dhamanat), with a reported 17.7% rise in mortgage issuance in 2024 to SAR 93.6 bn, S&P noted.
Mortgages have become the main financing tool to access a house amid affordability pressures, totaling about USD 180 bn by the end of last year. Meanwhile, rising demand for off-plan projects is boosting off-plan mortgage uptake, S&P said.
REMEMBER- Residential sales grew 38% y-o-y to 202.7k transactions worth SAR 164.8 bn in2024.
Market shifts reshape the sector: Rising homeownership costs are driving a social shift toward apartment living and off-plan purchases with mortgages instead of villas, townhouses, and turnkey homes, the report reads.
The government remains central to market growth through homeownership targets, set at 70% by 2030, with 65.4% achieved in 2024, S&P noted. The authorities are working with developers to boost housing supply, projecting to add 400k units across major cities to raise the total offerings to 3.9 mn by 2028. New policies are also coming into place to regulate annual land allocations, aiming to ease some supply pressure and stabilize prices.
LOOKING AHEAD- While global trade tensions and oil price volatility pose additional risks, population growth, Vision 2030 initiatives, and urban housing shortages are likely to result in a resilient demand, S&P said. Interest rate cuts should also further boost mortgage growth.
BUT- Execution risks persist due to the increased prevalence of off-plan mortgages. Moreover, the premium residency visa program has so far had limited impact, probably due to the high minimum investment requirement at SAR 4 mn, the rating agency added.
