Housing dominated real estate activity in the Kingdom in 1H 2025, driving around 63% of a total transaction value of SAR 123.8 bn, according to Knight Frank’s latest Saudi Arabia Residential Market Overview (pdf). Nearly 93.7k housing transactions were recorded nationwide, a 7% increase y-o-y, with a combined value of SAR 77.5 bn. The uptick was supported by higher mortgage activity, government-backed initiatives, and the delivery of new residential supply in key urban centers.

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Riyadh’s housing transactions went against the national trend, dropping 31% y-o-y in 1H 2025, with total value declining 20% to SAR 29 bn, in what Knight Frank considered to be a phase of recalibration rather than a fundamental weakness. Despite the slowdown, prices remained resilient, with average apartment prices rising 10.6% y-o-y in 2Q to SAR 6.2k per sqm, supported by strong demand in central and transit-connected districts. Villa prices across the capital rose 8.2% y-o-y in 2Q to SAR 5.5k per sqm, with northern Riyadh remaining the most expensive district for villas.

Jeddah’s housing market strengthened, with transactions up 19% over the past 12 months, with total value rising 28% y-o-y to SAR 17.3 bn. Apartment prices rose 2.7% to SAR 4.3k per sqm in 2Q, led by central and western districts. Meanwhile, villa prices increased 3.2% over the past 12 months to SAR 5k per sqm, with demand concentrated in the city’s northern districts.

Madinah saw the sharpest growth in residential transaction values across the Kingdom in 1H 2025, climbing 49% y-o-y to SAR 3.4 bn, while stronger demand from both investors and end-users pushed transaction volumes up 38% y-o-y. Apartment prices in the city averaged SAR 3.8k per sqm in 2Q, up 2.5% y-o-y, while villa prices held broadly steady at SAR 3.5k per sqm.

In Makkah, transaction values dropped 33% in 1H despite an 11% rise in volumes, reflecting a shift toward smaller or more affordable units. Apartment values slipped 0.5% in 2Q to SAR 3.7k per sqm, while villa prices edged up 0.4% to SAR 3.4k per sqm over the same period.

Looking ahead: Knight Frank expects new housing supply in the holy cities to continue expanding — Makkah’s stock is forecast to reach 462k units by 2028 from 428k in 2Q 2025, while Madinah’s is projected to hit 381k units by 2028, up from 353.4k in 2024. The rollout of the new foreign ownership law in January 2026, alongside large-scale projects such as Masar Destination in Makkah and Rua Al Madinah, is expected to deepen the market liquidity and boost investor sentiment across the Kingdom.

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