Recently introduced strategic reforms aimed at creating a favourable environment for investment and strengthening the non-oil sector have placed a focus on real estate which is forecast to double its contribution to economic output by 2030. Moreover, the implementation of various urban regeneration initiatives including mixed use communities and investment in infrastructures are expected to act as catalysts for sustainable development and a more active residential market.
The residential market across the main cities of Saudi Arabia started decelerating in 2016 as transaction volumes and sales prices came under pressure following a period of relative resilience.
In 2017, the slowdown in performance continued. In recent quarters we have seen that residential real estate prices have flattened, which could be an indication that the market has bottomed out and may be close to stabilising following a year of rapid decline.
Overall, the drivers for the Saudi Arabian residential market appear to be generally positive for the long term despite some key risks to market performance including heightened geopolitical risks weighing on consumer sentiment, further volatility in oil prices and increased challenges entailed by the implementation of economic reforms.
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