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RIYADH: Saudi real estate sector continues to recover with an expectation of a revival in the kingdom’s GDP growth, driven by rising oil prices, increased production and high government spending on infrastructure projects, according to the Kuwait Financial Centre (Markaz).
Government spending on infrastructure projects as part of the Vision 2030 programme is expected to boost non-oil GDP growth, and the fiscal balance, which was severely dented due to Covid-19, is expected to improve in 2021 and beyond, stated Markaz in its recently issued ‘KSA Real Estate Outlook H1 2021’ report.
The report highlighted expected GDP growth in Saudi Arabia for 2022, mainly on the back of increasing oil prices and higher production.
It also revealed positive indications of stability and recovery in the Saudi real estate sector, and expects real estate prices to stabilise after a long period of decline since 2015.
Markaz’s report indicated that investments are expected to pick up as the government initiates major projects like Neom City, and follows through with the Saudisation policy.
Moreover, steady population growth, government subsidies, and the enacted mortgage law are enabling banks to finance home purchases fuelling the growth in the residential sector.
On the current Saudi real estate scene, Bassam N Al Othman, managing director, Mena Real Estate at Markaz, said: “We strongly believe that it is currently recovering, and we anticipate an acceleration in pace over the next few years, based on our expectations of favourable macroeconomic factors during this period.”
Markaz analysis is based on its proprietary ‘Real Estate Index’, which helps investors assess the real estate market.
“The Real Estate Index is derived from various economic indices, such as oil and non-oil GDP, inflation rates, increase in employment opportunities, and others. We also analysed data related to the Saudi real estate market covering the past seven years from which we extrapolated our expectation for the sector,” added Al Othman.
The report also indicated that the Saudisation programme may lead to an increase in employment opportunities, which is yet another positive indicator for the real estate sector.
Moreover, resuming work from office spaces and an increase in tourism is expected to improve the overall demand for the office, commercial, and hospitality sectors.
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