RIYADH: Real estate prices in Saudi Arabia increased by 1.6 percent in the fourth quarter of 2022, compared to the same period in 2021, primarily driven by a rise in residential property values, according to the latest report released by the General Authority for Statistics.
The GASTAT report revealed that the price of residential properties increased by 2.6 percent in the fourth quarter of the previous year, mainly fueled by a 2.7 percent rise in land plot prices.
According to the report, other sub-sectors such as commercial and agricultural real estate saw a marginal decline of 0.2 percent and 0.8 percent respectively, resulting in reducing the rate of increase in the general index.
The report further noted that the price of villas increased by 1.7 percent, while apartments rose by 2.2 percent.
GASTAT pointed out that house prices decreased by 0.4 percent year-on-year in the fourth quarter of 2022, while residential and commercial building prices were stable and did not record any relative change.
Real estate prices in the commercial sector decreased by 0.2 percent due to the fall in the prices of commercial plots of land, while exhibition prices decreased by 2.3 percent, the report added.
Agricultural real estate prices also decreased due to the drop of 0.8 percent in agricultural land prices.
Third quarter vs Fourth quarter
Compared to the third quarter of 2022, the general real estate index in Saudi Arabia increased by 0.6 percent in the final three months of year, mainly due to the increase in residential property prices that went up by 0.8 percent.
The price of residential plots of land also increased 0.9 percent quarter-on-quarter, the report noted.
On a quarterly basis, the prices of villas rose 0.1 percent, while the prices of apartments also went up by 0.1 percent in the fourth quarter.
The report further documented a fall in the prices of exhibitions by 0.4 percent whereas commercial buildings stood firm.
2023 and beyond
Meanwhile, Saudi Arabia’s real estate activity witnessed a 53.7 percent drop during the first week of 2023 due to weak liquidity flows driven by high-interest rates.
The value of deals in the residential sector also decreased during the first week of 2023 by as much as 47.5 percent, despite registering a growth of 19 percent in the last week of December 2022.
According to a report from PwC Middle East, Saudi Arabia’s ongoing initiatives implemented by the government, including access to finance and regulations standardizations, are transforming the housing market in the Kingdom, even as it witnessed a decline in the first week of 2023.
The Kingdom’s housing demand which stood at 99,600 units in 2021 is expected to increase by more than 50 percent to reach 153,000 houses by 2030.
Earlier in January, Bahrain-based Investcorp said that it will invest as much as $1 billion in Saudi real estate over the next five years.
In a statement, Investcorp said that it has already acquired a logistics warehouse in Dammam in the east of the Kingdom, and has identified a further $100 million in potential deals.