RIYADH: Apartment prices in Saudi Arabia have increased by 32 percent, while villa prices rose by 21 percent in the last 12 months, according to the global real estate consultancy Knight Frank. “Villa and apartment prices in Saudi Arabia are rising faster and touching the peak levels of 2016,” Faisal Durrani, Knight Frank’s partner and head of research in the Middle East, told Arab News at the Euromoney Saudi Arabia Conference. The Kingdom’s residential real estate transactions have increased by 20 percent year over year, said Durrani. The increase in property prices has also taken a toll on the affordability of villas. People in Riyadh and Jeddah must cough up more than eight and 13 times their annual income, respectively, to buy a villa. On the other hand, apartments are reasonable as people need to spend four times their annual income to buy one. “Four to six times is considered affordable,” said Durrani, indicating that apartments are a preferred option over villas in Saudi Arabia. There has also been a socio-cultural transition among Saudis, who are more open to living in apartments. “We see a structural shift in the market. It is more socially acceptable to live and raise a family in an apartment,” he said. Infrastructure development Durrani said that Saudi Arabia will become the world’s fastest-growing economy this year as the Kingdom pushes its ambitions articulated in its Vision 2030 blueprint. He explained that a core part of the blueprint is the provision of world-class housing, which is why residential real estate is a critical component of all the giga-projects announced thus far. “The Kingdom is positioning Riyadh as the new commercial nerve center, but NEOM will be the real crown jewel of Vision 2030,” said Durrani. NEOM is radically redefining urban living in resource-poor regions, he added. The futuristic city is expected to house 9 million residents across 300,000 new homes once the project reaches completion, making it the largest giga-project announced to date. The massive supply has already drawn a ripple of excitement, with a recent Knight Frank research highlighting that one in five Saudis wants to buy a home in NEOM. “There is already huge excitement among the population to be part of NEOM,” he said. Commercial interests Over 9,000 investment licenses were issued to international companies to work and operate in the Kingdom during the first half of 2022, Durrani said. “A lot of them want to be based in Riyadh,” he added. In fact, the commercial interests in Riyadh are so high that office occupancy in the city is an astounding 97 percent, reported a recent Knight Frank study. “The King Abdullah Financial District, for example, is fully leased, so there is no space available. We are in a situation where if there is even a slight increase in demand, office rents will rise more,” he said. Clearly, there is a considerable demand for more offices, making it an attractive asset class for investors. “There is a demand, and therefore there is a strong investment case for building more offices and investing in that asset class,” added Durrani. Knight Frank witnessed about SR7.5 billion ($2 billion) in foreign direct investment into Saudi Arabia in the first quarter of 2022, an increase of 10 percent. In attracting FDI, the Kingdom ranked 14th out of the G-20 countries. Durrani, however, stressed the importance of developing an asset class that can attract global institutions as it is one of the things the region has not yet been able to do successfully.