Excepted Riyadh .. Real estate sales increased throughout the ‎Kingdom during Q3‎

Knight Frank Middle East said that the value of real estate sales increased throughout Saudi Arabia during the third quarter of 2022, but declined in the capital, Riyadh, with the rise in real estate prices in the Gulf region, exceeding buyer expectations and affordability.

Knight Frank added, in a report published by Zawya, today, Tuesday, that the volumes and values ​​of real estate deals in Riyadh declined in the third quarter of this year, as the total volume of homes sold in the capital decreased by 30% until the end of the third quarter of this year, 2022, reaching 7,750 deals, compared to 11,074 deals last year.

It explained in the report that the total value of transactions declined by 20% in the capital, to reach about 8 billion riyals ($2.13 billion), while residential real estate transactions across the Kingdom grew by 6% in the third quarter of 2022, but the volume Sales decreased by 24%.

“The affordability gap between buyer expectations and the large increases in house prices recorded in cities across the Kingdom are supporting the slowdown in the number of home sales,” said Faisal Durrani, partner and head of research at Knight Frank Middle East.

Durrani added that “the average prices of apartments in the capital, Riyadh, increased by 30% in the past 12 months, and by 40% in the desirable suburbs in the north of the city, while the prices of villas in the capital increased by 20%.”

Despite a pipeline of 200,000 homes for the capital by 2030, Knight Frank estimates the city will face a shortfall for a rising population of 17 million by 2030, up from 7.5 million now.

Hewcontinued: “To make matters worse, surveys indicate that some sellers choose to rent out their inventory to take advantage of the influx of local and international immigrants who are drawn to the city for work, further eroding the supply of sales.”

For his part, Harman de Jong, partner in real estate strategy and consulting at Knight Frank, said that the Kingdom’s Ministry of Housing is making great efforts to provide affordable housing within the framework of the Kingdom’s Vision 2030.

De Jong added: “However, rising land and construction costs pose challenges for some developers looking to partner with the Kingdom’s government, with profit margins eroding rapidly and the feasibility of some projects being re-evaluated, according to the latest surveys.. However, projects that The bulk of off-plan units have been sold in progress as developers are incentivized to complete developments as scheduled, or even ahead of plans.

Knight Frank also stated in the report that the number of mortgages for apartments in the Kingdom increased by 12% until August 2022, while the number of villas decreased by 45%.

“The popularity of apartment living is increasing while the average Saudi family size is declining, as young citizens choose to leave their parents’ homes early,” Durrani said.

He added, “In a country where 56% of the population is under the age of 35, this is a significant change and is likely to be a significant source of new housing demand in the future.”

The report indicated that the city of Jeddah witnessed an increase in house prices, to grow by about 3% at the level of villas, during the third quarter of 2022, and the prices of apartments in the city increased by up to 6%, while the number of deals decreased by 19%.