More than 150,000 residential mortgages were issued in Saudi Arabia in the first half of the year, which is 10 times more than the same period five years ago, when the kingdom launched its Vision 2030 programme, according to global property consultancy Knight Frank.
Prime office rents in Riyadh have also recovered to pre-Covid-19 levels as business activity and demand picked up, the consultancy said on Monday. The kingdom’s industrial market is also expanding at an unprecedented rate, it said.
A record number of new business licences was issued in the first quarter this year, Knight Frank said. Government efforts to reshape the economic and real estate landscape are driving a sharp upturn in business activity, the consultancy said.
Saudi Arabia, Opec’s top oil exporter, is focused on diversifying the economy under its Vision 2030 programme that aims to cut its dependence on hydrocarbons and develop local industries and the kingdom's manufacturing capabilities.
“The government is delivering on its pledge to improve access to world-class housing for all,” Faisal Durrani, partner and head of Middle East research at Knight Frank, said.
Saudi Arabia has set an ambitious target of raising home ownership rates in the kingdom to 70 per cent by 2030 under the Sakani programme – a joint initiative between the Ministry of Housing and the Real Estate Development Fund. The fund distributes land plots and arranges home loans for Saudi citizens seeking to build homes.
The kingdom plans to add more than 100,000 new homes by the end of 2023 in Riyadh and close to three million square metres of new office space is being built, along with more than 12,000 hotel rooms, spread across mega projects worth an estimated $63 billion.
More than 500,000 units will be added to Riyadh's housing stock by 2030, according to Knight Frank.
New developments in the capital include the $20bn Diriyah Gate Project with 20,000 housing units, $17bn King Salman Park community with 12,000 units, as well as the $8bn Qiddiyah mega entertainment project.
The kingdom is also spending nearly $575bn to deliver more than 1.3 million new homes, more than three million square metres of offices and 100,000 or more hotel rooms, mostly along the Red Sea coast, with Neom being the main project.
The Arab world’s biggest economy recorded 48bn Saudi riyals ($12.89bn) worth of residential mortgage contracts in the first quarter of 2021, hitting a five-year high, Knight Frank said in June.
“The peak in residential mortgages seems to correlate with demand for real estate advisory services this year exceeding pre-pandemic levels seen in 2018 and 2019,” Harmen de Jong, partner of real estate strategy and consulting at Knight Frank Saudi Arabia, said.
“We are beginning to see increased appetite from private sector real estate developers in the form of public-private-partnership initiatives with large-scale government-led projects. This is a key trend, which will further support the realisation of Vision 2030."