Saudi Real Estate Market Continues to Rebalance, Selective Recovery Expected in 2nd Half

Saudi Arabia's real estate market has entered a "rebalancing" phase, marked by a significant slowdown in the first half of 2026. Official indicators revealed a sharp decline in transaction values, reflecting a period of adjustment that observers had anticipated following signs of change in 2025.

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The decline in transaction value and volume was very logical.

Data from the Saudi Ministry of Justice's Real Estate Market indicates a dramatic 51.5 percent drop in the total value of real estate transactions. This figure fell to $21.9 billion (82.2 billion riyals) in the first half of 2026, compared to $45.1 billion (169.4 billion riyals) in the same period of 2025. Transaction activity also slowed considerably, with the number of deals decreasing by 26.4 percent to 161,900 from 220,000 a year prior. The volume of traded properties saw a 32.4 percent decline, and the total traded area decreased by 22.2 percent.

Despite the slump in transaction volumes, property prices showed relative resilience. The average price per square meter fell by 11.4 percent to 1,965 riyals from 2,217 riyals a year earlier. The highest recorded price per square meter also decreased by approximately 27 percent.

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The real estate investor, especially the speculator, is now going through a serious reassessment phase, particularly with the government’s clear direction toward developing the sector and correcting its practices.

Real estate expert Ahmad Al-Faqih described the decline as "very logical," attributing it to two key developments: regional geopolitical events, specifically the US-Iran war, and the impact of government decisions aimed at market rebalancing. He noted that many investors are moving assets into the "non-traded" category, awaiting market stabilization. Al-Faqih considers interest rates and financing costs secondary to these geopolitical and regulatory factors. "The real estate investor, especially the speculator, is now going through a serious reassessment phase," he stated, emphasizing the government's focus on developing the sector and correcting practices to redirect liquidity into genuine projects and increase housing supply.

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This approach will help redirect large liquidity flows into genuine development projects and increase housing supply.