The Kuwait Financial Centre (Markaz) has issued its “KSA Real Estate Outlook H1 2021” report, where it highlighted expected gross domestic product (GDP) growth of Saudi Arabia for 2022, mainly on the back of increasing oil prices and higher production.
The report also found positive indications of stability and recovery in the Saudi real estate sector, with real estate prices expected to normalize following a long period of decrease since 2015.
The government spending on infrastructure projects as part of the Vision 2030 program is expected to increase non-oil GDP growth, and the fiscal balance, which was severely dented due to COVID-19, is likely to improve in 2021 and beyond.
Bassam Al Othman Managing Director Real Estate – MENA Markaz
“We strongly believe that the Saudi Arabian real estate sector is currently recovering, and we anticipate an acceleration in pace over the next few years, based on our expectations of favorable macroeconomic factors during this period. Markaz’s 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 analyzed data related to the Saudi real estate market covering the past seven years from which we extrapolated our expectation for the sector.”
According to Markaz’s recent report, investments are likely to increase as the government launches significant projects such as Neom City and implements the Saudization program. Furthermore, steady population growth, government subsidies, and the enacted mortgage law are allowing banks to finance home purchases fueling the growth in the residential sector.
Markaz’s report noted that the Saudization initiative may result in more job opportunities, which is yet another positive sign for the real estate market. “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,” according to the report.
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