Saudi Arabia has announced reforms designed to stabilize land values and residential rental rates in Riyadh, a move that comes at a critical time for property buyers. Industry sources indicate that these reforms represent the most significant changes since 2016 when a 2.5% annual tax on vacant land owners was introduced. This previous measure helped accelerate land development but also contributed to rising property prices and rents, driven by increasing demand from first-time homebuyers.

Forecasts suggest that the population of Riyadh will grow from approximately 7 million in 2022 to about 9.6 million by the end of this decade. A recent report by consultancy Knight Frank estimates that between 2024 and 2034, there will be a demand for an additional 305 000 housing units from Saudi nationals.

The new reforms include several key initiatives aimed at increasing housing availability. Authorities plan to offer between 10 000 to 40 000 residential plots over the next five years, targeting eligible Saudi citizens, with prices capped at SR1 500 per square meter. Additionally, restrictions on land transactions in two major northern areas of Riyadh have been lifted. These areas encompass a total of 33.2 square kilometers, supplementing over 48 square kilometers of land released earlier, according to Saudi media reports.

An official from a real estate consultancy noted that these reforms will significantly benefit young Saudi nationals looking to purchase homes, whether for personal use or as investments. The official emphasized the significant pent-up demand for housing in Riyadh and highlighted that the opening of freehold rights to non-nationals has only intensified this need.

While new luxury projects, such as the Trump Tower, are being launched in Saudi Arabia, it is crucial to ensure that affordable housing options are also available for Saudi nationals. The official concluded that the Riyadh reforms are instrumental in achieving this balance.