Saudi Arabia’s residential market is showing signs of increasing maturity with several urban centres demonstrating significant increases in rental rates and transactional performance varying across the kingdom, according to leading property expert JLL.

 

Fueled by evolving end-user needs and a growing preference for affordable apartment living, this market activity is underpinned by the kingdom’s ambitious urban development projects under the Vision 2030 agenda, which continue to attract substantial investments into the key residential markets of Riyadh, Jeddah and the Dammam Metropolitan Area, stated JLL in its KSA Living Market Dynamics report for Q2 2025.. 

 

These investments are further propelled by population growth, economic diversification, and the government’s home ownership initiatives. 

 

The report also highlights the strategic impact of master-planned communities as the growing demand for integrated living environments shapes future supply, particularly in Riyadh and Jeddah.

 

Saud Al Sulaimani, the country lead and head of Capital Markets at JLL Saudi Arabia, said: "The Saudi Arabian residential market is maturing, reflecting a dynamic landscape driven by the kingdom’s broader objectives to meet end-user needs."

 

"While ongoing government initiatives have led to strong underlying demand, the sector is poised for further evolution and diversification, catalysed by the upcoming foreign ownership law to be implemented in January 2026. This legislation is expected to invigorate the sector and boost real estate supply, attracting international developers and investors to the Saudi market, thereby opening a broader range of opportunities for all stakeholders across the kingdom," he added.

 

JLL's in-depth analysis reveals compelling performance indicators across the Kingdom, with Riyadh’s residential market continuing to show positive momentum, demonstrating a notable 15.1% surge in villa prices and a 13.3% increase in apartment prices in Q2 2025. Rental rates in the capital climbed by 13.9% annually for villas, while apartment rents rose by 6.9%.

 

Jeddah’s market showed a more fragmented performance. Although villa prices rose by a modest 4.4% annually, apartment prices experienced a slight 3.0% decline over the same period. In the rental market, Jeddah’s apartment rents increased by 2.4% annually, while villa rents decreased by 2.8%.

 

JLL’s report also provides insights into the distinct landscape of the residential market in the Dammam Metropolitan Area, encompassing Dammam, Al Khobar, and Jubail. 

 

With waterfrontage and fair weather, it is a popular destination for waterfront homes among the Saudi population. This is reflected in the growing demand for high-end residential developments offering a broad range of community and recreational amenities, including green spaces such as parks. 

 

Al Khobar, known for its high-quality compounds and villas, saw apartment prices increase by 5.8% and villa prices by 2.2% annually. 

 

In Dammam, which has more apartment assets, prices remained relatively stable for apartments, while villa prices recorded a marginal increase of 1.8% annually.

 

The kingdom’s prime urban areas showcased varied transactional dynamics, according to JLL’s latest report. Jeddah and Al Khobar recorded increased sales transactions, underscoring strong market activity in these regions, while Riyadh and Dammam experienced slight declines. 

 

In the capital, total sales transactions decreased by 1.5% in the year to Q2. Of the 2,758 transactions recorded, apartments were in the majority (81.3%). An Narjis emerged as the most popular area for apartment transactions (21.9%), while Al Yasmeen led in terms of villa transactions (21.9%).

 

The volume of residential transactions in Jeddah increased by a significant 46.1% year-on-year to Q2 2025, totaling 1,100, with Al Marwah being the preferred area for apartment transactions (26.1%) and Ar Rawdah for villa transactions (17.0%). Al Khobar saw a marked 23.7% increase in sales transactions, while total sales transactions in Dammam decreased by 6.7% year-on-year to Q2 2025. Apartments comprised the majority of these transactions in both cities.

 

As for supply, in Riyadh, the total residential stock rose to 2.17 million units in the first six months of 2025 following the delivery of 5,600 units, and an additional 18,900 new units are expected to enter the market by year-end. Jeddah increased its total stock to 1.23 million units and will add 8,640 units in the remaining months of 2025.

 

The future residential supply in both Riyadh and Jeddah is anticipated to expand northward as part of the cities' growth corridors, with a significant portion of new housing stock emerging from master-planned communities.

 

In Riyadh, the growing popularity of apartments as a preferred unit type is encouraging developers to introduce more apartment offerings, complete with amenities and facilities such as gyms and adequate parking. 

 

Existing residential stock in Dammam Metropolitan Area is currently primarily concentrated near the coast in Al Khobar and Dammam, while future supply is shifting inland and towards the southern parts of the region, it added.-TradeArabia News Service