An inflow of expats has been caused by Saudi Arabia’s 2021 requirement forcing foreign companies to establish local offices by the end of 2023 or risk missing out on the best opportunities in Saudi Arabia. But, as the lack of acceptable housing has arisen as a key problem among new and arriving inhabitants, it has become clear that this migration is still going through growing pains.
In this article, we will be talking about how the property shortage in Riyadh is affecting company registration in Saudi Arabia. Making the most of the best opportunities in Saudi Arabia is necessary when investing in the region. Nevertheless, sometimes, it can be difficult to do so since there are certain delays that prevent this from happening. Let us observe:
- Residential prices rise in the region
- Experts talk about the issue
- Future estimations
1. Residential prices rise in the region
The overall transaction value of homes in the Kingdom has climbed by 6% when compared to this time a year ago, according to the most recent research from international real estate advisory firm Knight Frank. As residential prices in Saudi Arabia’s cities continue to rise.
In Riyadh, the typical apartment value is up by as much as 30% over the past year. With some of the northern suburbs’ well-located suburbs experiencing increases of over 40%; as the city’s chronic housing shortage continues to have a negative impact on pricing.
As a result, there were fewer real estate transactions; which led to a 24 percent decrease in the amount of home sales this year, according to Knight Frank.
2. Experts talk about the issue
Home sales are slowing down, according to Faisal Durrani, partner and director of Middle East Research at Knight Frank. According to him, the widening economic gap between what consumers want and the sharp increase in property prices observed across the KSA are factors slowing down the pace of home sales.
Despite a promising pipeline of almost 200,000 new houses for the city by 2030 (Saudi Vision 2030), he claims that the rate of price growth is still moving sharply upward. This, influencing the company formation in Saudi Arabia and the best business opportunities in Saudi Arabia.
As a result, compared to last year, when there were 11,074 transactions, the total number of residences sold in the capital decreased by 30%; reaching 7, 7750 transactions in the entire year to the third quarter of 2022.
3. Future estimations
According to Knight Frank’s estimations, Riyadh will confront a home supply gap when the city’s population rises to 17 million by 2030, up from 7.5 million currently.
According to Durrani, the issue gets worse by anecdotal information that some businesses are leasing their stock in an attempt to make a profit from the influx of domestic and foreign migrants who have been attracted to the area for employment. This reduces the amount of goods available for sale.
As Riyadh’s commercial activity grows, more individuals move to the city in search of work; raising the need for office space and housing while supply catches up.
According to Oxford Economics, the number of jobs in Riyadh will be increasing by roughly 5% by the end of 2022, with an additional 3% increase in 2023.
According to Knight Frank, the residential sector in Jeddah’s second major cities saw similar trends. With average condo and villa prices increasing by 6% and 3%, respectively, during the 3rd quarter of 2022.
In the year to the 3rd quarter, the number of home sales in Jeddah fell by 19%, reaching 3,711 transactions. Despite this, according to Knight Frank, transaction value jumped by 30% over the same time frame.