Riyadh is swiftly establishing itself as a significant global player in the real estate sector, posing a challenge to Dubai’s historical supremacy.
Riyadh’s substantial cost advantage over the UAE city and the Saudi government’s extensive efforts to attract international investors with financial incentives, as outlined in a recent industry report, are primarily driving this shift.
Growing Pool of Investors Boosts Riyadh’s Real Estate Prospects
Another contributing factor is the extensive pool of potential domestic investors, estimated at 37 million, along with the increasing number of international investors, according to Arabian Business.
These elements combined have the potential to position the Saudi capital city as the emerging focal point for real estate investments in the region.
“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 Galtsev, founder of Realiste, told Arabian Business.
Knight Frank’s data indicates that apartment sale prices in Riyadh are projected to increase by 22 percent, while villa prices are expected to rise by 12 percent year-on-year.
Furthermore, the global consultancy’s data suggests that Riyadh is poised for substantial growth, with more than 1.5 million available units and an anticipated 10 percent supply increase by 2025.
Dubai vs. Riyadh: The Competitive Landscape
Realiste highlighted that although Dubai has historically been a dominant player in the real estate market, Riyadh is rapidly emerging as a strong contender for notable growth and dominance in various aspects.
This transformation is driven by Saudi Arabia’s increasing global recognition as an innovation and economic powerhouse, which is significantly boosting the capital city’s thriving real estate sector.
“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’s Rising Appeal for Real Estate Investment
“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,” Galtsev 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 Initiatives Aim to Further Enhance Investment Potential in Saudi Real Estate Sector
According to the report, government-backed initiatives aimed at improving the city’s infrastructure, advancing technology, and nurturing cultural attractions have played a crucial role in enticing both visitors and investors to Riyadh.
In response to the rising costs of land and housing, Saudi Arabia has earmarked 100 million square meters of land for residential development in the capital and other cities.
“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,” Galtsev said.
