Saudi residential transaction volumes fall 12% year-on-year as land sales rise; Riyadh office market remains tight

• National residential transaction volumes declined 12% year-on-year in Q2 2026, while increasing 9% quarter-on-quarter
• Residential land accounted for 51% of all transactions and 52% of transaction values
• Riyadh apartment values increased 3.1% year-on-year, while villa values declined 2.2%
• Riyadh Grade A office rents increased 3.4% year-on-year, with city-wide occupancy at 96%

Riyadh | 15 September 2026: Saudi Arabia's residential market remained subdued in the second quarter of 2026, with transaction volumes and values both below year-earlier levels as affordability and continued regional uncertainty weigh on purchasing decisions, according to global property consultancy Knight Frank's latest analysis.

A total of 45,740 residential transactions were recorded across the Kingdom during Q2, 12% below the same period last year, although 9% higher than Q1. The total value of residential transactions reached SAR 41.9 billion, down 24.6% year-on-year, despite increasing 6% quarter-on-quarter.

Faisal Durrani, Partner – Head of Research, MENA said: “The improvement in transaction activity from the first to the second quarter should be viewed in the context of a much weaker year-on-year performance. The residential market remains more cautious than it was a year ago, with affordability continuing to influence purchasing decisions and prolonged regional uncertainty adding another layer of consideration for buyers.

“The continued uncertainty around the regional situation is particularly relevant to purchasing decisions among Saudi nationals. While transactions are still taking place, the lack of clear visibility around the wider geopolitical environment is encouraging a more measured approach to some buying decisions and is likely to continue to weigh on the pace of activity in the near term.”

At the same time, the increase in land transactions is an important development. Changes to the White Land Tax regime are increasing the incentive for landowners to consider bringing undeveloped land forward, with some choosing to sell rather than take on the capital and execution requirements associated with development themselves. We are also seeing landowners increasingly explore partnerships with developers to bring forward residential and mixed-use schemes.

This is an important shift in the way land is being brought into the development cycle and one that could have implications for the future supply of housing across the Kingdom.

LAND CONTINUES TO ACCOUNT FOR A SIGNIFICANT SHARE OF ACTIVITY

Residential land accounted for 23,110 transactions during Q2, equivalent to 50.5% of all residential transactions. By value, land transactions totalled SAR 21.7 billion, representing approximately 52% of total residential transaction values. Apartments accounted for 28.9% of transactions, while villas represented 11.3%.

The prominence of land transactions is significant in understanding the underlying residential market. While headline transaction volumes provide an indication of overall activity, the high proportion of land sales means that they should not be interpreted as equivalent to completed-home purchases.

The increased movement of land also reflects changing development dynamics, as landowners respond to the evolving regulatory and economic environment. Alongside outright sales, partnerships between landowners and developers are providing another route through which land can be brought forward for residential and mixed-use development.

RESIDENTIAL PERFORMANCE REMAINS MIXED

Performance across the Kingdom's major residential markets remained varied during Q2.

Riyadh recorded 10,667 residential transactions, 2% below the same period last year but 23% higher than Q1. Transaction values totalled SAR 14.3 billion, down 14% year-on-year but 8% higher quarter-on-quarter.

In Jeddah, transaction volumes declined 1% year-on-year to 6,669, while transaction values increased 31% to SAR 10.3 billion. The Dammam Metropolitan Area recorded stronger activity, with transaction volumes increasing 21% year-on-year to 3,896 and transaction values rising 20% to SAR 4.9 billion.

Price performance was similarly mixed. Riyadh apartment values increased 3.1% year-on-year to SAR 6,369 per square metre, while apartment values increased 1.2% in Jeddah and 2.8% in the Dammam Metropolitan Area. Villa values, however, declined across all three markets, falling 2.2% in Riyadh, 1.4% in Jeddah and 0.9% in the Dammam Metropolitan Area.

Harmen De Jong, Regional Partner and Head of Consultancy, MENA, said: “Saudi Arabia's residential market is becoming increasingly differentiated, with affordability, location, product quality and infrastructure playing a greater role in determining demand.

“The development pipeline is substantial, but the key consideration will be how effectively new supply aligns with the purchasing power and requirements of end users. Rising construction costs and a more uncertain market environment may also influence the timing and viability of some projects, making announced supply an imperfect proxy for what will ultimately reach the market.”

SUPPLY PIPELINE FACES GREATER DELIVERY UNCERTAINTY

Knight Frank forecasts Riyadh's residential stock to increase from approximately 2.81 million units in 2026 to 3.30 million units by 2030. Over the same period, residential stock is forecast to reach approximately 1.47 million units in Jeddah and 986,000 units in the Dammam Metropolitan Area, alongside continued supply growth in Makkah and Madinah.

However, the scale of the announced pipeline should be considered alongside the changing cost environment facing developers. Construction raw material costs have increased by approximately 20% since the beginning of the year, creating additional pressure on project economics and potentially affecting both development decisions and delivery schedules.

As a result, scheduled supply should not necessarily be regarded as supply that will reach the market within the originally anticipated timeframe. The pace and composition of actual delivery will be increasingly important in assessing the future balance between housing supply and demand.

RIYADH OFFICE MARKET REMAINS TIGHT, BUT OCCUPIERS BECOME MORE CAUTIOUS

Riyadh's office market remained tight during Q2, with Grade A rents increasing 3.4% year-on-year to SAR 2,810 per square metre and Grade A occupancy at 97%. Grade B rents increased 2.3% to SAR 1,690 per square metre, with occupancy at 95%, resulting in city-wide occupancy of 96%.

Jeddah also recorded rental growth, with Grade A rents increasing 3.1% year-on-year and Grade B rents rising 6.2%. Grade A occupancy stood at 95%, compared with 89% for Grade B space.

While current occupancy levels remain high, the outlook is becoming more nuanced. Continued regional uncertainty is encouraging some occupiers to adopt a more cautious approach to expansion and longer-term commitments, even as limited availability of high-quality space continues to support rents.

Amar Hussain, Associate Partner – Research, MENA said: “Riyadh's office market remains tight, but the high occupancy levels we are seeing today should not be interpreted as an indication that occupier sentiment is unaffected by the wider environment.

“With continued geopolitical uncertainty and a substantial volume of new space planned, occupiers are becoming increasingly focused on timing, quality and flexibility. As additional stock comes forward, we expect greater choice to give occupiers more leverage, while the best-located and highest-quality buildings should remain comparatively well positioned.”

SUPPLY PIPELINE COULD ALTER THE OFFICE MARKET DYNAMIC

Knight Frank estimates Riyadh's office stock at approximately 6.10 million square metres in Q2 2026, with announced development expected to increase stock to approximately 10.60 million square metres by 2028 — an increase of around 74%. Jeddah and the Dammam Metropolitan Area are also expected to see office stock increase over the same period.

The scale of this pipeline could materially increase occupier choice, particularly in Riyadh. However, the timing of delivery will be an important variable given elevated construction costs and the more uncertain operating environment.

Foreign investment activity continues to provide a longer-term source of potential occupier demand, with 9,018 foreign investment licences issued during Q2, up 252% year-on-year. While licences do not translate directly into office requirements, continued international business activity and the Regional Headquarters Programme remain relevant to Riyadh's longer-term commercial outlook.

Susan Amawi, Partner – General Manager, KSA, said: “The Riyadh occupier market is entering a period where choice, quality and timing will become increasingly important. Businesses continue to value high-quality office space in well-connected locations, but the combination of forthcoming supply and a more uncertain regional environment means occupiers are likely to remain disciplined in their decision-making.

“The result is likely to be a more differentiated office market, with the strongest buildings and locations continuing to attract demand while older and less efficient stock faces increasing competition.”