A breakthrough in Saudi real estate: Medina surpasses Riyadh

The residential real estate sector in Saudi Arabia witnessed a remarkable transformation during the first half of this year, with Medina topping the list of the most active real estate markets, surpassing the capital Riyadh, which had led market growth over the past years.

According to a report by Bloomberg, this shift reflects new dynamics in demand and purchasing power, driven by recent reforms that have attracted local and foreign investments to the holy cities.

Medina Real Estate Leads

Data from Knight Frank, a real estate consultancy, showed that the value of transactions in Medina rose by 49% compared to the same period last year, while transaction volumes increased by about 38%, outperforming all major cities including Riyadh, Jeddah, Mecca, and the Eastern Province.

Faisal Durrani, Head of Middle East Research at the company, said: Demand was highest in Medina, as buyers rushed to secure homes before the expected entry of foreign investors, while sellers expedited deals to benefit from rising prices.

Attractive Factors for Investors

The report explained that Saudi Arabia has recently eased restrictions on real estate investment in Mecca and Medina, allowing foreigners to invest in real estate development companies starting in 2026. The Kingdom also approved a new law facilitating property ownership for foreigners in key centers such as Riyadh, as part of its efforts to boost foreign investment flows.

Durrani noted that many affluent Muslims around the world are showing interest in owning property in Mecca and Medina, often for personal reasons such as retirement, which is driving the launch of major projects, most notably the "Roua Al Madinah" project affiliated with the Public Investment Fund.

What About Riyadh!

On the other hand, Riyadh recorded a decline in real estate activity after years of rapid growth, with transaction volumes dropping by 31% and values falling by about 20% during the first half of the year.

According to Bloomberg, the near doubling of housing prices since 2019 has made affordability an increasing challenge, prompting many buyers to postpone their decisions. Nevertheless, Knight Frank views this decline as "a natural market adjustment that does not reflect fundamental weakness", confirming that apartment and villa prices continue to rise, albeit at a slower pace.

The Saudi Real Estate Sector Holds a Strategic Position

The real estate sector is one of the pillars of Saudi Vision 2030, as it contributes to economic development and provides new job opportunities. It also represents an attractive market for international investments, especially in Mecca and Medina due to their special religious status.

Experts believe that allowing non-Saudis to invest in companies owning properties in the two holy cities will enhance the Kingdom's position as a global investment destination, contribute to increasing GDP, expand the funding base for real estate companies, as well as improve real estate services and develop new projects that meet growing demand.

Edited by: Imtilak Global©