As one of the wealthiest countries in the region, Saudi Arabia’s real estate sector is growing along with demand. Euromonitor data indicates that Saudi Arabia’s real estate sector grew by 16.7% in 2021, ranking second in the Middle East and Africa region in terms of turnover. For foreign investors, the country’s real estate market offers numerous opportunities.
In this article we will look at the demand for the sector, the costs associated with it and its profitability. Let’s get started.
Is Saudi Arabia a good place to invest in real estate?
In 2021, the real estate sector in Saudi Arabia grew by 16.7% and was the second largest in the region in terms of turnover value. and that’s not all, according to the Euromonitor agency, the sector’s turnover is forecast to grow by 6.6% year-on-year during 2021-2026.
So, in our opinion the dat shows numerous opportunities in the sector and not only in a short term also in a long term investments.
What data shows that there are opportunities in Saudi Arabia?
With a turnover of $70.4 billion, Saudi Arabia accounts for 10.8% of the Middle East and Africa total in 2021. And profitability stands at 78.2%, the highest in the region! In terms of absolute revenue growth in the sector, Saudi Arabia is expected to rank first in the Middle East and Africa region.
It is important to know that households drives market demand, accounting for 72.8% of total demand in 2021. Even if the government found several project to improve the touristic market, the industry of real estate remains in the need of the local families.
Which are the real estate companies in Saudi Arabia?
The number of companies involved in the real estate sector in Saudi Arabia has also increased significantly to 31,328. However, the sector is fragmented, with the top five companies generating 2.0% of the total value of the production value in 2021. One of the leading companies in the sector is Dar Al Arkan Real Estate Development Co, the largest company in Saudi Arabia, which will generate 0.9% of the sector’s total value output in 2021.
Drawbacks of investing in real estate in Saudi Arabia
It is worth noting that costs in the sector are increasing by 24.5% in 2021 and will continue to rise in 2022, mainly due to the Coronavirus health crisis and, more recently, the Russian-Ukrainian war. These two events have led to a considerable increase in the price of raw materials and building materials.