Real estate Investment: Fine Option in the Face of Inflation
The last ten years have proven beyond a doubt that real estate investment and the purchase of real estate assets such as buildings, houses, villas, and lands, or through participation in real estate funds or purchasing shares of real estate companies in the stock market, is the best and most beloved investment for the Arab citizens in general and the Saudi citizens in particular. Saudi real estate has proven Its ability to preserve the value of money in the face of waves of inflation and economic slowdown.
Corona Crisis and New Economic Measures
The Corona crisis had a severe impact on large and small economies alike. Many wanted to preserve the value of their money in investment assets, most notably real estate of all types, residential, commercial, and administrative. Here the importance of real estate investment appears mostly in purchasing new properties and owning them with the aim of generating commercial income through renting or flipping real estate.
Saudi Vision 2030 and Real Estate Investment
Years ago, the Kingdom realized the importance of diversifying its sources of income without relying primarily on oil and its revenues. It supported other economic sectors, and Vision 2030 came to be more like an economic charter to develop the Kingdom’s economies and diversify its resources. Real estate investment in the Kingdom comes after oil directly in the volume of investments, and the size of the real estate market is expected to grow in the Kingdom of Saudi Arabia from 64.43 billion US dollars in 2023 to 94.19 billion US dollars by 2028, or about 8% during the next five years from 2023.
The Improvement of Real Estate Market in Saudi Arabia after End of Corona Crisis
In May 2021, the real estate market in the Kingdom began to show a general improvement in commercial activity after the contraction caused by Corona crisis, thanks to several measures, most notably facilitating and reducing property tax, meeting the labor shortage, and developing subsidized housing programs, which in turn helped stimulate the economy and create a source of income.
Figures and Data on Real Estate Financing in Saudi Arabia
Despite the great efforts made by the Kingdom of Saudi Arabia to build new housing projects that provide the Saudi citizen with a decent, advanced housing and a stable financial asset that increases Saudi real estate wealth, the data issued by the Central Bank of Saudi Arabia showed a decrease in the volume of new residential real estate financing provided to individuals by banks to 4.15%, one billion riyals during April 2023, a decrease of 55% compared to the same period in 2022.
This reflects a decline in the value of new residential real estate financing by about 3.1 billion riyals, or 43%, compared to March 2023.
The data shows that the volume of new residential real estate financing during the month of April was the lowest in 4 and a half years, since December 2018, which then amounted to about 3.57 billion riyals.
Growth of the Saudi Real Estate Market and its Opportunities
In recent years, the residential real estate market in the Kingdom of Saudi Arabia has grown rapidly, especially in the cities of Riyadh and Jeddah, thanks to the major real estate and development projects implemented by Saudi companies.
With the launch of Vision 2030 activities, Saudi Arabia worked to expand the scope of its economy beyond dependence on oil and its derivatives. Real estate wealth in Saudi Arabia is second in rank after oil, and the Kingdom aspires to increase the real estate sector’s share of national income, as the Saudi Ministry of Housing aims to build 300,000 housing units within The coming years, in partnership with the private sector.
Saudi Arabia has a growing population, with a high percentage of young people entering the labor market who are in turn requesting new housing. Government initiatives have helped encourage home ownership, such as subsidized mortgage programmes, which provides
opportunities for real estate investors to tap into the residential market and meet the evolving needs of the population.
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