More than 50% renters in Saudi Arabia plan to buy property in next five years: Knight Frank

Despite a shift in demographics, a reduction in household sizes and on-going cultural reform, there has been little change in the nature of housing supply across Saudi Arabia, with majority of new stock centred towards large villas on the periphery, a recent survey found.

The new demographic cohort may struggle to afford or have the desire to occupy the new supply, real estate consultancy firm Knight Frank said on Thursday, publishing its inaugural Saudi Arabia National Housing Survey that explores factors underpinning effective demand on a national and city level across the Kingdom.

“Saudi Arabia has seen rapid changes, where population has increased by over 520% in the 50 years to 2020 and where over the same period its rate of urbanisation has increased from 49% to 84%,” Taimur Khan, head of research at Knight Frank Middle East, said in a statement.

In addition, the demographic profile has also changed with an estimated 58% of Saudi population below the age of 30, Khan said, adding that despite the changes the nature of housing supply has not altered much.

“This backdrop has meant that affordability has become one of the most prevalent challenges facing the Saudi Arabian housing sector,” Khan said.

According to the survey, 56% of those renting said they were looking to buy a property in the next five years, while demand for properties below SAR 1 million is the highest.

Moreover, while 51% of all respondents currently live in an apartment, 61% are looking to purchase a villa when they next move. However, Knight Frank estimates that at least a third of the market still retains a preference for living in an apartment.

Over 62% of potential buyers surveyed would be likely or very likely to purchase an off-plan property.

The respondents suggested that the most important attribute they would require in a home would be a garden, closely followed by a modern design.