Saudi Arabia’s real estate loans surged to SR883.3 billion ($235.54 billion) by 2024, with significant growth in both corporate and individual sectors. This trend points to increased market confidence and the importance of institutional investment in advancing the Kingdom’s Vision 2030 goals. Despite substantial price pressures challenging affordability, collaborative efforts between real estate firms and government entities aim to sustain market accessibility and efficiency.
Saudi Arabia’s real estate loans reached an unprecedented SR883.3 billion ($235.54 billion) by the end of 2024, representing a year-on-year growth of 15.12 percent, driven by robust demand from retail and corporate sectors. The Kingdom’s central bank, SAMA, reported a 26.23 percent surge in corporate real estate loans, amounting to SR202.04 billion, while individual lending accounted for 77.13 percent, rising 12.19 percent to SR681.24 billion.
Real estate financing now constitutes approximately 30 percent of total Saudi bank loans, which total SR2.96 trillion as of 2024. This trend indicates a growing confidence in the Kingdom’s economy, with institutional capital contributing to the development of premium commercial and integrated residential projects — vital components of Saudi Arabia’s economic diversification agenda.
Elias Abou Samra, CEO of Rafal Real Estate, remarked on the market’s increasing sophistication, noting that local and international investors are taking significant stakes with a long-term outlook. This divergence suggests that, while individual buyers continue to dominate the market, corporate clients increasingly leverage favorable financing conditions for large-scale mixed-use endeavors.
Corporate investments are characterized by complex financing arrangements tied to broader urban development visions outlined in Saudi Arabia’s Vision 2030. Abou Samra highlighted that landmark projects like Sports Boulevard and King Salman Park are drawing global investment interest during their initial phases of development.
During the 2021-2023 period post-COVID, numerous developers emerged with low-rise developments largely financed through off-plan sales and minimal corporate lending. Current projects, however, are complex in nature, demanding more financing awareness to support mixed-use and income-generating developments critical to sustained growth.
Abou Samra explained that real estate companies are collaborating with Saudi banks to ease property purchases, supported by an integrated value chain developed by the Ministry of Housing. This approach ensures compliance with national regulations while streamlining processes for developers, thereby reducing delays.
RAFAL has aligned its community development strategies with this government initiative under the National Housing Co. This consortium provides access to seamless financing, expediting loan approval and enhancing operational efficiency amidst growing demand for quality developments.
In its latest project, Tilal Khuzam, just west of King Khaled International Airport, nearly 3,600 apartments were launched, with the first phase sold out within four months, a success attributed to government-backed efficiency.
Knight Frank’s Saudi Report 2025 indicated that the real estate market faces substantial price pressures due to heightened demand in urban locales. This price growth may challenge affordability, emphasizing the necessity for policy interventions to maintain equilibrium between market expansion and accessible housing.
Price escalation has been especially notable in Riyadh and Jeddah, where urbanization and strategic investments have driven significant increases. Abou Samra commented on the observed disparity between Riyadh and other cities, noting that while Riyadh experiences intense market strain, other regions are maintaining healthier, sustainable price levels.
As Riyadh transforms into a dynamic international hub, it increasingly attracts expatriates and foreign investors. Consequently, preferences are shifting from traditional villas to multi-family living spaces, catering to a modern urban lifestyle. Abou Samra also mentioned the rising demand for buy-to-let units, which yield rental returns that substantially exceed those of many G20 counterparts.
Prospects for real estate finance are influenced by shifts in the US Federal Reserve’s interest rates, with Saudi Arabia’s rates following suit due to the riyal’s dollar peg. Following rate cuts in late 2024, lending may become more affordable, stimulating real estate investments. Despite projections of sustained elevated rates, Abou Samra emphasized the sector’s resilience.
The Ministry of Municipalities and Housing has swiftly introduced alternative funding models to mitigate the impact of higher borrowing costs, ensuring real estate projects remain financially accessible amid the challenging economic backdrop. These initiatives have preserved buyer rights while effectively managing pricing in the current overheating market.
In conclusion, Saudi Arabia’s real estate sector is experiencing significant growth, driven by increased lending and corporate investments. The collaboration between real estate firms and the government underscores a commitment to developing an efficient and sustainable market, while rising prices highlight the need for responsive policy measures. As urban areas evolve and attract global interest, the industry’s adaptability and innovation in financing solutions will be crucial for maintaining accessibility and stability in the housing market.
Original Source: www.arabnews.com
