Riyadh faces ‘affordable’ housing challenge: Knight Frank

Housing affordability is a growing challenge in Riyadh due to a fast-rising population, Knight Frank said in a recent report.

Rapid urbanization in Saudi Arabia has put “significant” pressures on housing markets in the Kingdom’s urban centers, the research consultancy said in its recent “Urban Futures” report, which examined 32 cities around the world.

The affordability issue is likely to get worst in the future as increasing numbers of people congregate in cities to access opportunities, it noted.

In addition, multi-generational household salaries help “masking” the issue across the Kingdom, the consultancy said, adding that if average salaries are taken into account rather than multi-generational household salaries, the affordability of Riyadh’s financial market “changes dramatically.”

“City-wide average affordability statistics are useful but they fail to highlight disparities in housing costs within sub-markets or across the income spectrum. Therefore, even cities in the ‘most affordable’ quadrant still have room for improvement and may not be affordable to lower income groups,” said Raya Majdalani, research manager, Knight Frank Middle East.

She added: "Riyadh illustrates well the fact that affordability is relative. In fact, the challenge entailed by housing affordability is growing despite the city’s presence in the most affordable quadrant status.”

In order to address these challenges, Saudi Arabia’s Ministry of Housing has taken a number of initiatives to get Saudi residents on the property ladder such as the “Sakani” program.

However, the report said that a “synergistic ecosystem” including education, healthcare and recreation components must be created to ensure future value creation of affordable housing schemes.

“Affordable housing schemes are best developed alongside typologies with varying socioeconomic profiles,” said Shehzad Jamal, partner healthcare & education, Knight Frank Middle East.

“We believe healthcare and education assets provide an excellent opportunity for cities to partner with the private sector to both service their communities and build economically diverse neighborhoods," he added.