In the first half of 2025, Saudi Arabia‘s real estate sector experienced remarkable growth, with housing deals soaring to a substantial $33 billion. This surge reflects dynamic trends in key cities like Riyadh, Jeddah, and Madinah, indicating a robust demand for residential properties and a rise in investor confidence. From legislative changes to significant infrastructure investments, various factors are steering the real estate market toward promising horizons.
Significant Growth in Housing Transactions
The city of Madinah recorded impressive transaction values amounting to SR3.4 billion ($906 million), marking a 49% increase compared to the previous year.
Additionally, transaction volumes in Madinah rose by 38%, reflecting both heightened investor confidence and strong demand from end-users.
Dominance of Housing in Saudi Market
On a national scale, the housing sector emerged as the principal driving force in the real estate market, representing approximately 63% of the total transaction value of SR123.8 billion ($32.96 billion) during the first half of 2025.
Residential transactions saw a year-on-year increase of 7%, with nearly 93,700 transactions totaling SR77.5 billion ($20.6 billion).
This growth momentum has been propelled by an uptick in mortgage activity, supportive government schemes, and the timely delivery of new housing projects across major urban centers.
Faisal Durrani, Partner and Head of Research at Knight Frank, remarked, “One of the most significant legislative developments this year has been the approval of the new Law of Real Estate Ownership by Non-Saudis.”
According to Durrani, “Set to come into effect in January 2026, this new ownership framework, combined with accelerating residential deliveries and mortgage market reforms, is expected to enhance market liquidity and improve investor sentiment.” He also noted that, “This comes at a time when key markets like Riyadh are starting to stabilize as we approach the government’s 70% home ownership target, with high house prices moderating demand to some extent.”
Riyadh Market Adjustments
Riyadh experienced a significant recalibration in the housing market during the first half of 2025. Transaction volumes plummeted by 31% year-on-year, causing values to decrease by 20% to SR29 billion ($7.71 billion).
Despite this downturn, real estate prices continued their upward trajectory. The average apartment prices in Riyadh surged by 10.6% in Q2 2025, reaching SR6,175 ($1,642) per square meter, with districts near the new Riyadh Metro witnessing the most substantial increases.
The Al Taawun district saw a staggering 32% rise to SR9,470 ($2,518) per square meter, while values in King Abdullah District grew by 17% to SR7,656 ($2,035) per square meter.
Villa prices also reflected growth, averaging SR5,470 ($1,456) per square meter, an 8.2% increase year-on-year. Northern Riyadh continues to be the most expensive area for villas, priced at SR8,660 ($2,306) per square meter.
Harmen De Jong, Regional Partner and Head of Consulting at Knight Frank, stated, “Riyadh remains one of the Kingdom’s most dynamic markets, supported by ongoing Vision 2030 initiatives and major infrastructure investment.”
He added, “The implementation of the foreign ownership law next year will energize the market by boosting liquidity and enhancing the quality of developments. Together, these factors indicate that Riyadh’s current market adjustment is part of a broader and healthier evolution, positioning the city for more diversified and sustainable long-term growth.”
Jeddah on the Rise
In stark contrast, Jeddah has shown strong growth, with transaction volumes soaring by 19% and total values increasing by 28% to SR17.3 billion ($4.6 billion).
The average apartment prices rose by 2.7% to SR4,324 ($1,150) per square meter, particularly in central and western districts where demand is most pronounced.
Villas also saw a price increase of 3.2%, reaching SR5,040 ($1,341) per square meter, driven by interest in northern districts.
Integrated, master-planned communities, such as Roshn’s Al-Arous, are becoming increasingly attractive due to their lifestyle focus and innovative urban designs, especially in coastal regions.
Rising Demand in Holy Cities
In the first half of 2025, transaction values in Madinah surged 49% to SR3.4 billion ($906 million), accompanied by a 38% increase in deal volumes. Apartment prices saw a modest growth of 2.5% to SR3,835 ($1,020) per square meter, while villa prices experienced a slight decline to SR3,500 ($933) per square meter.
Conversely, Makkah faced a 33% drop in transaction values, although the number of deals rose by 11%, indicating a shift toward smaller, more budget-friendly housing options.
The average apartment prices in Makkah slid 0.5% to SR3,650 ($973) per square meter, while villa prices edged up 0.4% to SR3,420 ($913) per square meter.
Amar Hussain, Associate Partner in Research at Knight Frank, explained, “Large-scale government-backed projects are transforming the urban landscape of Makkah and Madinah. The Masar Destination in Makkah is generating new corridors and mixed-use developments that integrate residential, commercial, and cultural spaces close to the Haram.”
He added, “In Madinah, the Rua Al Madinah project will introduce new hotels, cultural landmarks, and enhanced transit connectivity. These efforts will not only elevate the cities’ urban experience but also strengthen their attraction for residents and visiting pilgrims, supporting the government’s tourism and economic objectives.”