Saudi Arabia’s real estate market is showing the first signs of recovery after COVID-19, with home loan activity rising by 38% in the 12 months to February 2021.
A choice to exempt property deals from 15% VAT helped to boost activity in the residential market, as per Knight Frank’s Saudi Arabia Real Estate Market Review Q1 2021.
“The overall improvement in business confidence and market sentiment has led to a surge in residential mortgage loans, which rose by 38 percent in the 12-months to the end of February, which has, in turn, materialized in the form of a marked increase in residential transactions across the country, with Riyadh and Jeddah experiencing a 25 percent and 34 percent increase in deal numbers over the last 12 months,” said Faisal Durrani, head of Middle East research at Knight Frank.
However, there was a different performance in property values, with apartment costs rising in three major cities, while villa costs decreased.
Apartment cost per square meter raised in Riyadh by 4.4% to SAR 3450 ($920) per sq. m, by 6.5% to 3950 per sq. m in Jeddah, and by 3.2% to 3250 sq. m in Dammam Metropolitan Area (DMA) by the end of the first quarter of 2021.
Villa costs in Riyadh decreased by 1.6% to SAR 3750 per sq. m, by 6.3% to SAR 5,000 per sq. m in Jeddah, and by 8% to SAR 3250 per sq. m in DMA.
Rents increased marginally in Riyadh’s Grade A office market by 0.5% but decreased in Jeddah by 2.8% and DMA by 4.3%, in the initial three months of the year.
In the retail sector, rents for average-sized and super-regional malls decrease by 2.5% in Riyadh. Community malls saw a 3% fall in rents.