RIYADH: Saudi Arabia’s real estate market has rapidly emerged as a key pillar in the Kingdom’s quest for long-term sustainability and economic growth, benefiting local residents and foreign investors alike, experts have told Arab News. Under Vision 2030, the Kingdom is reshaping the sector through strategic investments, sweeping reforms, and mega-projects that are not only enhancing the nation’s infrastructure but also creating new opportunities. A central objective of the initiative is to diversify Saudi Arabia’s economy by developing non-oil sectors, making it more resilient to global market fluctuations. Real estate, as part of this strategy, is playing an increasingly important role in stimulating growth across the country, with tourism, entertainment, and the hospitality sector all assisting in reshaping the housing and commercial space landscape. The Saudi government has enacted a series of reforms designed to enhance real estate development and attract private investment. Key among these is the introduction of the Saudi Real Estate Refinance Co., established in 2017 to provide liquidity to the mortgage market and increase access to financing for homebuyers. In an interview with Arab News, Sally Menassa, partner at international management consulting firm Arthur D. Little Middle East, said: “The Kingdom’s openness to foreign ownership in real estate, coupled with incentives for international companies, is expected to fuel increased FDI.” Garvan McCarthy, chief investment officer at consulting firm Mercer, told Arab News the Vision 2030 goal of boosting private sector contributions has led to an increase in real estate activity. “Reforms in regulations, such as easing foreign ownership restrictions and introducing public-private partnerships, have been undertaken to create a more attractive investment climate,” he added. Another development is the introduction of the White Land Tax, which imposes a 2.5 percent tax on undeveloped residential land. This is aimed at increasing the supply of developable areas and encouraging private sector investment in housing projects. Additionally, government initiatives like Ejar, a rental services app, are enhancing transparency in the rental market and encouraging more investments in the tenancy sector. Recent investments have been heavily directed toward urban development projects, including modern infrastructure such as roads, airports, and public transportation networks. These investments are driving up property values in both urban and suburban areas, particularly in newly developed zones that are set to become key economic hubs. Real estate as a catalyst for homeownership Another core component of Vision 2030 is the government’s effort to raise homeownership rates among Saudi citizens to 70 percent by 2030. In pursuit of this goal, Saudi Arabia has launched several initiatives aimed at providing affordable housing solutions and easing access to financing. The Sakani program aims to make homeownership more attainable for Saudi families by providing financial support, facilitating loans, and subsidizing housing. This initiative has significantly reduced barriers to homeownership, stimulating residential real estate development. The residential real estate sector has been growing at a 4.5 percent compound annual growth rate since 2017, with projections indicating it will double by 2028, reaching SR51 billion ($13.5 billion), according to Menassa. McCarthy added: “Since the introduction of these reforms, homeownership in Saudi Arabia has seen a substantial increase, driven by both governmental support and private sector development.” The percentage of homeownership has exceeded 63 percent, up from 47 percent in 2016, reflecting the effectiveness of the Sakani program and other related initiatives. Mega projects shaping the future of real estate Several landmark real estate projects have become symbols of Vision 2030’s far-reaching impact. These projects are not only reshaping Saudi Arabia’s urban landscape but also positioning the Kingdom as a significant player in the global real estate market. NEOM Located in northwestern Saudi Arabia, NEOM is one of the most ambitious projects under Vision 2030. This multi-billion-dollar smart city aims to be a global hub for technology, sustainability, and innovation and provides opportunities for real estate development. Menassa described NEOM as a “key aspect of this real estate transformation,” noting its role in the broader Vision 2030 agenda. She pointed out that the development will incorporate smart city technologies, with a focus on industries such as energy, water, and biotechnology, as well as food, advanced manufacturing, and entertainment. This forward-thinking approach is expected to attract both domestic and international real estate investors looking to capitalize on NEOM’s innovative urban vision. Qiddiya Qiddiya, another flagship project under Vision 2030, is positioned to become a global destination for entertainment, sports, and the arts. Situated near Riyadh, this expansive development will feature theme parks, concert venues, sports arenas, and cultural institutions. The project’s focus on entertainment and tourism is expected to drive significant residential and commercial real estate development in the surrounding areas. McCarthy added that Qiddiya is poised to transform the region into a vibrant entertainment capital, drawing millions of visitors annually and offering extensive opportunities for investors in hotels, commercial spaces, and residential properties. The Red Sea The Red Sea Project is one of the world’s most ambitious tourism initiatives, aiming to develop a luxury tourism destination along Saudi Arabia’s Red Sea coastline. Covering 28,000 sq. km, the project will include 50 hotels, 1,000 residential properties, and a host of leisure facilities. Menassa pointed out that the project involves “developing real estate in the form of boutique hotels, museums, and cultural venues that enhance visitor experiences while respecting and preserving historical significance.” This high-end tourism hub is expected to drive growth in the luxury residential and hospitality sectors, contributing significantly to Saudi Arabia’s tourism and real estate markets. The future of Saudi real estate As Saudi Arabia moves toward becoming a more diversified and sustainable economy, the real estate sector will continue to play a critical role in this transformation. According to a report by King Abdullah Petroleum Studies and Research Center, Saudi Arabia’s economic diversification will lead to an increase in high-value industries such as advanced manufacturing, pharmaceuticals, and renewable energy, all of which will drive further demand for commercial real estate. Menassa observed that the Kingdom’s commercial real estate market size is estimated to grow “at a strong CAGR of around 8.6 percent to 2028.” McCarthy added: “As Saudi Arabia diversifies into advanced manufacturing, renewable energy, and pharmaceuticals, commercial real estate should benefit from the demand for specialized facilities.” Moreover, as sectors such as tourism, entertainment, and retail flourish under Vision 2030, demand for hospitality and retail spaces is expected to rise substantially. The ongoing transformation is positioning Saudi Arabia as a key player in the global real estate and tourism industries, with Riyadh at the heart of its ambitious vision.