The government has rolled out sweeping reforms to stimulate the real estate market since April — opening property ownership to non-Saudis, permitting foreign investment in Makkah and Madinah real estate firms, as well as amending the White Land Tax law. Riyadh’s Royal Commission also launched the Tawazoun platform, offering citizens residential plots capped at SAR 1.5k per sqm.

We sat down with Youssef Khattar, CEO of Coldwell Banker Saudi Arabia, to unpack the flurry of decisions, and understand the impact of these new regulations on the Saudi property market. Khattar explained the short- and long-term effects on prices and supply, the different market dynamics across the Kingdom’s major cities, the evolving future of the luxury real estate segment, and the strategic goals behind the new policies. Edited excerpts from our conversation:

To understand the Saudi real estate market, you have to look at each city individually. Riyadh, Jeddah, Makkah, Madinah, and the Eastern Province are all separate markets, each with its own variables, supply-and-demand dynamics, and economic drivers. The recent fees on undeveloped white lands — ranging from 2.5-10% — began in Riyadh, making it the primary case study for the immediate impact of these new policies. These decisions are not random; they are based on careful analysis of price indicators and supply-and-demand metrics in recent years.

Government intervention was necessary to correct years of inflation in prices. Over the past three years, we witnessed a significant rise in the price of land, which in turn drove up sales and rental prices for residential, office, and retail properties, with some rental prices jumping by 100-150%. This was compounded by rising interest rates, making homeownership even more difficult for citizens. In the hospitality sector, a surge in tourism and major events in cities like Riyadh increased pressure on hotels, raising the average daily rate.

This created a negative impact on customers, whether it was a Saudi citizen looking to rent or buy a home, or a business owner seeking commercial space. The government’s intervention was designed to achieve two main goals: first, to increase the supply of available land in order to bring down prices, and second, to motivate landowners and developers to actively develop their plots rather than leaving them vacant.

The impact of the new fees on land prices was immediate. We’ve seen swift results in the few weeks since the decision. Landowners, facing the prospect of significant fees, are now actively seeking to sell, lease, or enter into partnerships to develop their holdings. This has successfully increased the supply of land on the market and has already led to a slight decrease in prices, which we expect to become more pronounced after the first tax invoices are issued. For developers, this has created a period of filtration and negotiation; they are becoming more selective about the projects they take on.

BUT- The impact on other real estate products — in terms of buying or renting apartments and offices — will likely not be felt for another one to three years, as these development projects take time to complete. The market will only see a significant price correction when the supply of new units begins to outpace demand.

The Tawazuon platform is a strategic tool to support Riyadh’s population growth. The plan to offer 10k-40k plots of land annually through the platform is aimed at lower-to-middle income individuals who do not own property and have resided in Riyadh for at least three years. This isn’t just about providing affordable land — it’s a strategic move to encourage internal migration and support the plan to grow Riyadh’s population to 12-15 mn. By providing an asset they can develop over the long term, it helps anchor a key segment of the population in the capital, aligning with the city’s central role in the Kingdom’s future.

I disagree with the idea that development in the Kingdom is imbalanced, as the focus on Riyadh is a logical step to address its unique challenges. Riyadh is the capital and represents nearly a third of the country’s population. Riyadh was previously underdeveloped compared to other cities; its airport, for example, hadn’t been upgraded in 30 years. The current focus is a form of catch-up designed to transform the capital into a hub for business and tourism. Other regions have their own distinct economic engines — think Aramco in the Eastern Province, or Hajj, Umrah, and tourism in the west. So the strategy is tailored and flexible, not uneven.

Another key reform is allowing foreign ownership, which is expected to attract two distinct types of international buyers. The first segment is the global Muslim population of over 1.5 bn, for whom Saudi Arabia is a prime religious destination. Their focus will naturally be on Makkah and Madinah, which will significantly energize the market there and, to a lesser extent, in Jeddah due to its proximity and the Haramain tailway.

The second segment consists of international investors, similar to those we see in Dubai or Bahrain, who will be drawn to the Kingdom’s gigaprojects like Diriyah, New Murabba, and Neom for investment returns. It is crucial to manage this carefully to avoid inflating prices for Saudi citizens. Any price appreciation will likely be focused on the luxury, Class-A segment, not affordable housing. This policy will also incentivize Saudi developers to create high-quality projects that meet international standards to compete for these buyers.

Speaking of the luxury sector, the definition of luxury in the Kingdom is shifting from size to community and lifestyle. Luxury used to be defined almost exclusively by size — a 5k sqm villa or a 20k sqm palace. Today, and going forward, true luxury will be defined by being part of a high-end, integrated community that offers lifestyle, services, and amenities. A luxury tower built in a random location will no longer be considered a premium product. Instead, the luxury market will be concentrated within master-planned gigaprojects Diriyah, New Murabba, and King Salman Park in Riyadh, and projects like Masar Destination in Makkah. This shift reflects the changing preferences of a new generation and will be the new standard for luxury real estate.

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