US$ 6.3bn of private global capital could reap rewards of taking a long-term view on Saudi real estate

• Strong structural demand holds prospect of medium-term growth after current disruption abates
• High demand for new homes and lifestyle retail in the Kingdom attracts investor attention
• US$ 1.5bn of private capital targeting residential purchases
• US$ 3.4bn ready to be deployed in branded residences
• Opportunity around shortage of grade-A office stock stands out in commercial sector

Riyadh | 7 March 2026: The fundamental drivers underpinning growth across Saudi's real estate market remain robust, despite the recent conflict in Iran, according to the Destination Saudi 2026 report from global property consultant Knight Frank. Looking ahead, the report identified US$ 6.3bn of private global capital ready to enter the Kingdom's property market as the geopolitical situation normalises.

Faisal Durrani, Partner – Head of Research, MENA, said: “Notwithstanding the human and economic costs of the Middle East conflict, GCC governments have moved swiftly to demonstrate a heightened level of security and resilience, showcasing their defensive capabilities to reinforce the long-term stability the region has maintained for decades. Consumer confidence in Saudi Arabia is underpinned by strong structural demand drivers of population growth, capital inflows, business expansion and inward migration. More importantly, long-term loyalty and confidence of expats in GCC governments has been shaped by decades of investment in public wellbeing and residents’ welfare. As such, we do not expect long-term demand from non-resident investors to weaken but instead expect a temporary hiatus while the conflict resolves itself."

"The key downside risk lies in a prolonged escalation that disrupts travel flows, capital mobility, or business relocation decisions. Near-term investment activity may also slow as investors reassess their geopolitical risk tolerances. The underlying structural drivers supporting the Saudi real estate market remain intact, however."

Despite being overshadowed by recent events, 22 January 2026 was a landmark moment for Saudi Arabia’s property market, with the Kingdom formally opening its doors to non-resident international property investors for the first time. Adding further impetus to the Vision 2030 economic development programme, the newly approved property ownership law for non-Saudis unlocks foreign participation in 170 designated geographic areas and has the potential to reshape high-demand markets such as Riyadh, Jeddah, Makkah and Madinah.

Durrani explained: “The timing of the international, non-resident real estate ownership law is significant as many property sectors in the Kingdom are showing signs of approaching new market highs. The change in the non-resident international buyer rules is already creating substantive demand for real estate in the Kingdom. Indeed, prior to the start of the conflict, we identified US$ 1.5bn of global private capital that is targeting the residential market, while a further US$ 3.4bn is circling the branded residential sector.

Susan Amawi, General Manager, KSA, added: “Affordability issues stemming from a supercharged housing market in the wake of one of Vision 2030’s core goals – boosting the home ownership rate to 70% by the end of the decade – have resulted in a 55% decline in transaction volumes in Riyadh over the last 12 months, while the total value of home sales in the capital have dipped 48% over the same period. Our analysis indicates that Riyadh alone will require more than 305,000 additional homes by 2034 to accommodate its growing population, suggesting the long-term demographic story remains exceptionally positive, and the global investment community is clearly aware of this. This is why we believe the new ownership law could inject fresh capital, boost liquidity and attract a diverse international investor base.”

To understand the potential impact on international demand, Knight Frank has expanded the research first conducted in its 2024 Destination Saudi report, interviewing 1,550 people worldwide, across a range of income profiles, spanning Algeria, Egypt, India, Malaysia, the UK and the US, which includes 752 expatriates in Saudi Arabia and the UAE. The research was completed prior to the start of the ongoing regional conflict.

GLOBAL RESIDENTIAL BUYERS EYE SAUDI’S BIG FIVE

Knight Frank has found that Riyadh is the top target for 55% of global investors, while Jeddah is the second most desirable city (46%), followed by Madinah (43%), Makkah (41%) and Dammam (22%).

While Riyadh is the top target overall, the Holy Cities are preferred by certain buyer groups. Makkah is the primary investment target for potential purchasers from India (56%) and Algeria (45%). For Madinah, the strongest interest in purchasing a home comes from the UK (59%) and Malaysia (58%). Among Muslim respondents, 59% named Makkah as their key target and 63% favoured Madinah.

Durrani added: “The inseparable and intangible spiritual, cultural and religious links between the global Muslim investment community and the Holy cities is evident in the depth of demand for housing in the Holy Cities. Up until now, the global Muslim community has been unable to access property markets in Makkah or Madinah. The landmark international non-resident buyer law change changes this status quo for the first time.”

Among all potential investors, 55% of those with personal wealth of more than US$ 3 million are prepared to spend over US$ 2 million on a residential purchase in the Kingdom, compared to 17% of those worth up to US$ 500,000. Among Saudi-based expats, 36% expect to spend less than US$ 500,000, compared with 24% of international buyers.

Amawi, said: “Conflict or not, demand for housing will continue to rise and we forecast the need for approximately 830,000 homes for Saudi nationals alone by 2034. Riyadh remains the focal point of Saudi Arabia’s residential market, with average apartment values increased by 10.5% in 2025 to SAR 6,250 psm. Villa prices also increased by 6.5% over the same period, reaching an average of SAR 5,525 psm. But while pricing has continued to strengthen, transactional activity has moderated. These trends indicate an ongoing market adjustment, perhaps reflective of a new market price peak and affordability constraints. Nevertheless, the ongoing resilience of house prices suggests demand in key districts remains firm”.

Knight Frank highlights that global demand is centred on the Saudi capital, suggesting residential prices may remain resilient in certain price brackets. For instance, 63% of the global investment community has budgets of no more than US$ 1 million, for which 69% of buyers expect to secure a large villa or a townhouse. This may prove to be challenging in certain parts of the Kingdom, hinting at a possible disconnect between international buyer expectations and current market pricing realities. This points to the need to balance pricing strategies and product mixes carefully if developers are to tap into this wave of international demand.

RETAIL/F&B SECTOR RANKED AS THE SECOND MOST POPULAR INVESTMENT SECTOR

With consumer spending increasing by 10.7% year-on-year to hit SAR1.57 trillion (US$ 418.6bn) during 2025 and more than 3.4 million sqm of retail space due to be delivered by 2028, retail is the most preferred commercial sector among potential investors (37%), whether they are regional expats (36%) or reside elsewhere in the world (38%).

Jonathan Pagett, Partner – Head of Retail Advisory, MENA, said: “Saudi Arabia’s retail market is undergoing a structural shift, with growth increasingly driven by experience-led destinations, omnichannel delivery and stronger local brand participation. As digital penetration deepens and consumer behaviour evolves, successful retail environments will be those that integrate physical space, convenience and cultural relevance within mixed-use settings.

“This change in the retail landscape is being underpinned by the exceptionally young population demographics: 45% of the population is aged below 25; 63% is aged below 30 and this consumer group has very specific retail expectations, which is why we have witnessed a surge in lifestyle retail developments, centred on wellness, education and entertainment.”

The food and beverage segment is also a key driver of retail performance, accounting for 15% of all point-of-sale transactions in 2025 and representing SAR 105.5bn spent in restaurants and cafés. This reflects the importance of experiential destinations as the government continues to expand the segment, with Saudi Entertainment Ventures, a PIF subsidiary, for instance, planning to create 570,000 sqm of world-class entertainment destinations nationwide, worth more than US$ 4.7bn.

Demand for retail space remains high, with occupancy levels in Riyadh averaging 93%, underpinned by new flagship schemes such as The Avenues and Cenomi Jawharat Al Riyadh. Occupancy is also strong in Jeddah (88%) and the Dammam Metropolitan Area (94%).

Pagett continued: “Riyadh’s retail stock is forecast to grow by approximately 40% in the medium term, reflecting its role as the primary beneficiary of population growth, tourism and new mixed-use developments. Should all the promised stock materialise on time, the capital will boast 5.85 million sqm of retail space by 2028. In Jeddah, too, significant supply additions could boost the total retail stock by 20% to 3.57 million sqm by 2028. The DMA is expected to see space growth of approximately 43% to 2 million sqm over the same period. And it is this momentum that is helping to fuel global investor interest in the sector.”

US$ 3.4BN CIRCLES SAUDI BRANDED HOMES MARKET

Branded residences were identified as the joint third most popular commercial target among investors, alongside hotels, with US$ 3.4bn of global private capital interested in the sector.

Overall, 77% of high-net-worth individuals expressed an interest in purchasing a branded home in the Kingdom. Among this group, the strongest demand was seen among potential buyers from Egypt (95%), Algeria (91%) and India (90%). Expats with equally high aspirations include those living in Madinah (100%), Makkah (83%) and Dammam (79%).

Although the Saudi branded residential market is still in its infancy, with total stock currently standing at around 1,685 units, and a further 1,900 units in the development pipeline, the sector continues to expand nationally, with development hotspots including Diriyah Gate and Jeddah.

Notably, those with personal wealth of less than US$ 500,000 (80%) and those with a net worth in excess of US$ 3 million (84%) have the greatest desire to purchase a branded home in the Kingdom, suggesting a widespread market opportunity for developers across the price spectrum.

The bulk of budgets (44%) are capped at US$ 1 million, but 6% are prepared to spend more than US$ 20 million, with the largest share of demand coming from Egypt (20%) and Algeria (10%). Nearly a third (27%) of those worth over US$ 3 million are prepared to commit US$ 20 million+ to a branded home.

Amawi said: “Saudi Arabia is emerging as one of the most dynamic growth markets for branded residences in the GCC. Leading global brands, including Raffles, Ritz-Carlton, Armani, Aman, SLS, Trump and Jumeirah, are being introduced in prime destinations such as The Red Sea, Jeddah and Diriyah Gate in Riyadh. With the new international ownership regulations now in effect, we expect demand to extend beyond domestic buyers to include a broader pool of international purchasers.

“Once again however, international buyer budgets appear to be misaligned with current market prices. Clearly there are groups of international buyers that can afford ultra luxury branded residences, but as the Kingdom is a relatively new property market on the global stage, confidence and budgets will build with time, unlocking even higher budgets as the market matures and developers establish reputations for quality branded homes.”

DOMESTIC DEMAND FUELS HOSPITALITY GROWTH

The Saudi hospitality market has experienced incredible growth in recent years, fuelled in large part by growing volumes of domestic travellers, and the market was identified by potential global investors as the joint second most attractive segment, alongside branded residences.

The Kingdom has set an ambitious target of welcoming 150 million visitors by 2030, having surpassed 100 million visitors in 2023, seven years ahead of schedule, supported largely by surging domestic travel volumes, says Knight Frank. To support this growth, plans are in place to deliver approximately 358,000 additional hotel rooms nationwide over the next five to 10 years, including 250,000 in the Holy Cities. Knight Frank’s analysis indicates that this development pipeline will further skew supply towards the upper end of the market, with the share of four- and five-star hotels expected to rise from 60% of existing stock to 67% by 2030.

Harmen De Jong, Regional Partner – Head of Consulting, MENA, said: “Notwithstanding the current travel disruption across the region, demand from pilgrims for hotel accommodation is unlikely to abate in the medium to long term, given the intangible and structurally inelastic religious, spiritual and cultural links between the global Muslim community and the Holy cities of Makkah and Madinah. Indeed, with plans to boost the Umrah and Hajj pilgrim quotas, the 250,000-room hotel development pipeline cannot come soon enough for Islam’s holiest cities."

"However, while the growth of the upscale segment supports international tourism ambitions, it raises concerns around affordability for domestic travellers, who continue to underpin tourism demand. Our analysis points to a significant opportunity to redirect investment towards secondary and tertiary cities, where land values are more conducive to the development of budget and midscale hotels.”

PRIME OFFICE OCCUPANCY AT RECORD LEVELS

The office sector rounds out the top four most preferred sectors, favoured by 34% of global investors.

Durrani said: “Grade-A office occupancy is at record levels of 98% in Riyadh, which now sits alongside Dubai and Abu Dhabi in a short list of global gateway cities that have effectively run out of prime, grade-A office space, making it particularly attractive to potential international investors. As prices and rents approach what appears to be a point of inflection, an opportunity is emerging for owner occupiers to enter into sale and leaseback agreements, freeing up liquidity to boost their balance sheets. The capital could also be redirected into refurbishing their office space, or investing in new space. With offices serving as ‘showrooms’ to attract and retain new talent and clients, this creates a win-win for investors and owner occupiers. Furthermore, international capital often seeks long-income leased office space, with built in inflation-linked increases, and of course strong covenants. Given the prevalence of government and quasi-government occupiers across the country, this could pave the way for substantive volumes office sector investment activity.”

Grade-A office rents in Riyadh reached a record SAR 2,735 psm (US$ 730 psm) at the end of 2025, reflecting a 9.7% year-on-year increase, while grade-B rents rose by 22%. Vacancy levels remain exceptionally tight at 2% for grade-A space and 5% for grade-B offices.

The principal driver of this performance remains the Regional Headquarters (RHQ) programme, which has significantly boosted demand for institutional-grade office space. In response, developers are accelerating delivery. STC Square alone is expected to add approximately 60,000 sqm of new office space to Riyadh’s office market by 2027. If all the space being tracked is delivered on time, Knight Frank forecasts the capital’s total office stock will total 10.5 million sqm by 2028, which equates to a 60% jump on current levels.

Amawi concluded: “Saudi Arabia’s office market is being reshaped by policy reforms, such as the RHQ programme and the subsequent influx of multinational businesses. Indeed, to date, 780 companies have committed to or established their regional headquarters in Riyadh. These shifts are driving demand towards higher-quality, well-located office space, although legacy stock has also experienced strong rental growth as occupiers contend with a supply-starved market. Although a strengthening supply pipeline could shift the market in favour of occupiers, investors can take comfort in the fact that not all of the planned space is likely to be delivered on time, with our estimates suggesting 40%-50% is a more realistic expectation.”

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ABOUT THE SURVEY

Knight Frank’s Destination Saudi 2026 report explores the global appetite to own and invest in real estate in Saudi Arabia. Detailed interviews were carried out in partnership with YouGov and capture sentiment among expatriates currently residing in Saudi Arabia and the UAE, as well as international respondents considering real estate ownership or relocation to the Kingdom.

A total of 1,550 people were interviewed prior to the outbreak of the conflict, including 798 international respondents, 552 UAE-based expatriates and 200 Saudi-based expatriates. Collectively, they own 3,947 homes worldwide and have a combined net worth of US$ 1.16bn (excluding the value of their primary residences).

The interview sample reflects a diverse demographic profile, with 45% Muslim and 55% non-Muslim respondents, offering a balanced perspective on how Saudi Arabia’s residential landscape is viewed globally.