Saudi Arabia’s real estate market is showing clear signs that inflationary pressures are easing, after a package of government measures aimed at increasing supply, curbing land hoarding and rebalancing supply and demand.
The shift reflects the Kingdom’s efforts to reshape the real estate sector and strengthen its stability under Vision 2030.
After uneven price increases following the COVID-19 pandemic, real estate inflation in Saudi Arabia fell to negative 0.7% in the fourth quarter of 2025 from 3.6% a year earlier, according to the annual Vision 2030 report. The decline was supported by government measures aimed at improving market efficiency.
The trend continued in the first quarter of this year. The latest data from the General Authority for Statistics showed the real estate price index fell 1.6% year on year, driven by a 3.6% decline in residential prices. Commercial real estate prices, however, rose 3.4%.
Structural reforms restore balance
The price correction came alongside a series of government interventions aimed at addressing market imbalances, especially limited supply and speculation. In a major move to cool prices in the capital, the government allowed sale, purchase and development in four areas north of Riyadh covering more than 81 square kilometers.
The plan aims to provide citizens with up to 40,000 land plots a year over the next five years, at target prices of no more than 1,500 riyals per square meter.
Khaled Al-Mobid, chief executive of Menassat Realty Co., told Asharq Al-Awsat that the latest reforms had moved the market away from rapid and disorderly price growth toward a more balanced and sustainable phase.
He said increased supply, rent regulation and limits on unproductive landholding had begun to affect market behavior, especially in cities with strong demand. Fees on vacant land and properties, he added, had pushed inactive owners to develop, sell or lease their assets, helping curb speculation and improve the use of real estate assets.
Real estate expert Ahmed Faqih told Asharq Al-Awsat that the government decisions came “in the form of carefully studied doses of treatment” after a deep assessment of the market’s components.
He said housing carries the greatest weight in the inflation index, meaning that cooling the sector feeds directly into broader inflation levels. He expected the impact of the decisions to become clearer over the next 12 to 18 months, adding that this had already begun through the curbing of unreal demand and the increase in actual supply.
Pressure tightens on white land
At the same time, the government stepped up measures against undeveloped land by raising annual fees on white land to 10% from 2.5%.
Vacant properties were also included for the first time in the fee system, covering land and buildings of more than 5,000 square meters. The aim is to reduce the appeal of hoarding and push more units into the market.
Faqih said speculation had been concentrated mainly in land within peripheral development plans, especially in Riyadh. Raising white land fees, along with clear government signals that land was no longer a tool for speculation but for development, marked a turning point in the behavior of investors and speculators, he said.
He added that fees on vacant properties would also help curb speculation in residential products, especially apartments, by encouraging owners to use idle assets rather than keeping them off the market.
In another step to regulate transactions, the real estate market began responding to the Ministry of Municipalities and Housing’s official approval of executive regulations for annual fees on vacant properties.
The regulations allow fees of up to 5% of the value of an unused building within the approved urban boundary. The measure is designed to improve the use of real estate assets and stimulate supply growth inside cities.
Rent freeze
Regulatory policies also extended to the rental market. The Saudi Cabinet approved a five-year freeze on annual rent increases within Riyadh, covering both existing and new contracts, to support stability in the residential and commercial markets.
Al-Mobid said the decision changed investor behavior by shifting attention toward development, operation and sustainable returns rather than waiting for artificial price increases.
He said the rent freeze in Riyadh sent a clear message that the market was moving toward controlling inflation and achieving a better balance between landlords and tenants.
Faqih said the latest regulatory decisions would lead developers and investors to reposition themselves in the market by directing investment toward increasing supply and using the opportunities created by the current regulatory changes.
On the regulatory and digital fronts, the market has made tangible gains in infrastructure. Units listed in the real estate registry exceeded 4 million properties by the end of 2025, while more than 1.2 million upgraded real estate deeds were issued.
More than 3.2 million lease contracts were documented through the Ejar platform, and the number of licensed brokers rose to more than 106,000.
Al-Mobid said the figures reflected a sharp improvement in transparency and a decline in individual discretion because of clearer data. Faqih said Saudi Arabia’s rise of 11 places in international real estate transparency indicators strengthened the sector’s ability to attract foreign capital.
Supply steers the market
On the financing side, the 2025 Vision 2030 report showed continued growth in the individual real estate finance portfolio. Total outstanding individual real estate loans rose to 904 billion riyals, or $241.1 billion, by the end of 2025, from about 420 billion riyals, or $112 billion, in 2020.
Despite the sharp increase in financing, Al-Mobid said the market was no longer driven by financing alone. It had become more influenced by supply, regulations and product quality, he said. That helps explain why residential prices declined even as lending expanded.
Faqih agreed, saying financing had previously pushed up prices because buyers had limited options. The current increase in supply, he said, had helped create a more balanced and fair relationship between supply and demand.
Stable outlook and international appeal
These broad structural shifts helped raise the number of Saudi families who owned their homes to more than 851,000 by the end of 2025, from about 63,000 in 2019.
Looking ahead, Al-Mobid expected the Saudi real estate market to enter a phase of long-term stability based on maturity and data, rather than a temporary correction. He also said values could continue to decline for products whose prices had exceeded fair levels.
Faqih said the new system had created an “innovative investment map” in which real estate investment tools had changed radically, positioning the Saudi market as one of the leading regional and international destinations for sustainable strategic investment.