Riyadh is fast emerging as a serious contender in the real estate sector globally, challenging Dubai’s long-standing dominance, riding on the back of a huge price advantage over the UAE city and the Saudi government’s big push to woo international investors through financial incentives, a latest industry report revealed.
A vast pool of potential domestic investors – estimated at 37 million, besides the rising number of international investors, are the other factors that could propel the Saudi capital city to become the new regional hot spot for real estate investments.
“In stark contrast to Dubai, Riyadh’s affordability has been a key magnet for investors, promoting substantial economic expansion,” the report by Dubai-based proptech Realiste said.
“In comparison to real estate prices in other global cities, Riyadh offers notably affordable options at an average cost of $1,394 per square meter, whereas Dubai showcases prices at $7,002 per square meter,” the AI-driven analysis-based report said.
“Investments in Saudi Arabia are expected to reach hundreds of billions of dollars in the next 5 years, which will certainly raise prices and open up new opportunities for investors to receive multiple refunds,” Alex Galt, founder of Realiste, told Arabian Business.
The average sale prices for apartments are expected to surge by 22 percent, while villa prices are anticipated to rise by 12 percent year-over-year in Riyadh, according to data from Knight Frank.
The global consultancy’s data also showed that Riyadh is set for remarkable growth with over 1.5 million available units and a projected 10 percent increase in supply by 2025.
Dubai vs. Riyadh: The competitive edge
Realiste said while Dubai has long been a powerhouse in the real estate market, Riyadh is fast emerging as a contender for remarkable growth and dominance in various aspects, fuelled by Saudi Arabia’s rising status as a global innovation and economic powerhouse boosting the capital city’s burgeoning real estate market.
“With ambitious initiatives, robust economic growth, and an increasingly attractive investment environment, Riyadh is poised to challenge Dubai’s long-standing reign as the regional real estate leader,” said the report by Realiste, which operates in over 100 cities worldwide.
The numbers on economic growth and current trends in real estate prices indicate that Riyadh is indeed set for remarkable growth, signalling a promising future for Saudi Arabia’s real estate market and its potential to outperform Dubai, it added.
“Saudi Arabia is obviously the next big market – it is home to 37 million people. While prices – vis-a-vis the world market – are still low, the housing area there remains one of the largest in the world,” Galt said.
“In addition, there is a lot of need for infrastructure development and construction, which creates a great demand for quality housing,” the Realiste founder said, adding that “domestic demand, especially, is growing vigorously”.
Government push to further boost Saudi real estate sector investment potential
The report said government-sponsored measures to enhance the city’s infrastructure, advance technology, and foster cultural hotspots have been instrumental in attracting visitors and investors to Riyadh.
To address the increasing land and housing prices, Saudi Arabia has allocated 100 million square meters of land for the residential sector in the capital and other cities.
“This move aims to balance supply and demand, allowing for a more sustainable growth pattern,” the Realiste report said.
Alex Galt, founder and CEO of Realiste
“Investment demand is also fuelled by the fact that foreign investors were previously restricted the right to purchase real estate, but now everyone expects that they will get such an opportunity,” Galt said.
A booming market with enormous potential
The report said with a burgeoning population, increasing demand for housing and lifestyle facilities, supportive regulatory frameworks, and its strategic regional location, Saudi Arabia’s real estate market is expected to soar with vast potential in the coming years.
The country remains an attractive destination for global investors, despite the current regional challenges, it added.
Galt said despite some possible difficulties in the region, such as the situation with Israel and Hamas, most expect Saudi Arabia to become the next huge market in the next 5 years.
“It will continue to grow, attracting the attention of investors from all over the world, including Europe, Russia, and Arab countries,” he said.
Source : ArabianBusiness