Riyadh –  The demand for lower- and middle-income housing is still strong in two major Saudi cities despite the sluggish growth in the real estate market, according to a report released by audit, tax, and advisory services provider KPMG Al Fozan & Partners.

Riyadh Residential Market

The capital of Saudi Arabia is seeing the supply of about 1.3 million residential units, with other 30,000 expected in 2019, the report found.

“The majority of the new supply is focused towards the north and the east of the city while the centre is becoming saturated with various developments, as vacant land parcels become scarce,” head of real estate at KPMG AL Fozan and partners Firas Hassan said.

Sale prices and rental rates of villas in Riyadh are expected to decline in the current year on the back of the levy of the white land tax. Sale and rental rates of apartments in the city are affected by the economic slowdown.

“However, the popularity of apartments is increasing relative to previous years in the capital as a higher number of new developments are introducing apartments. New developments in central areas are still fetching the highest sale price ranging from SAR 3,000 to SAR 4,700 per square metre,” the report revealed.

Jeddah Residential Market

Marked by low homeownership rate, the real estate market in Jeddah is facing many challenges including affordability constraints, and the declined supply of residential units tailored for lower and middle-income segments.

KPMG’s report forecast that Jeddah’s market would receive a supply of 20,000 residential units in the years 2019 and 2020.

"The market is witnessing a shift in the trend as a proportion of the middle-income housing units are significantly increasing in the forthcoming supply. Majority of these developments are located towards the northern side of the city," Hassan remarked.

Source: Mubasher

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