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Saudi real estate sector blaming expat exodus for slowdown
| Published: | 20 Nov at 6 PM |
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Saudi Arabia’s expat exodus is keeping the lid on the kingdom’s real estate market.
Although the Saudi government firmly believes domestic demand will pick up, the present exodus of expat workers is having the opposite effect. Over the past year, property prices have fallen by between five and six percent, with rental prices down by one percent. The demand for affordable units is still apparent and supply is slowly increasing, but the entire market is now bearing the brunt of falling prices.
A recent study by S&P is linking the slump to the increasing non-Saudi exodus, noting statistics showing the workforce has lost 1.9 million expats over the past two years. Falls are being noted across the entire real estate sector’s various segments, meaning the industry is still showing sensitivity to failing economic growth. Upcoming private sector-aimed government initiatives are expected to increase domestic demand, with large government projects also contributing.
Home ownership amongst Saudi nationals was limited to 50 per cent three years ago, with recent government measures expected to result in 60 percent by next year and 70 per cent by 2030. For the remainder of this year, the kingdom’s GDP is expected to fall slightly due to shrinking oil production as well as the recent bombing of two major production hubs and an increase in regional geopolitical tensions.
In the meantime, the GCC in general is seeing an increase in interest in co-living facilities, mostly generated by expat millennials. Although the trend hasn’t yet hit Saudi Arabia, the UAE and Dubai are seeing new interest in recent constructions offering good facilities, high quality builds and affordable rents.
Although the Saudi government firmly believes domestic demand will pick up, the present exodus of expat workers is having the opposite effect. Over the past year, property prices have fallen by between five and six percent, with rental prices down by one percent. The demand for affordable units is still apparent and supply is slowly increasing, but the entire market is now bearing the brunt of falling prices.
A recent study by S&P is linking the slump to the increasing non-Saudi exodus, noting statistics showing the workforce has lost 1.9 million expats over the past two years. Falls are being noted across the entire real estate sector’s various segments, meaning the industry is still showing sensitivity to failing economic growth. Upcoming private sector-aimed government initiatives are expected to increase domestic demand, with large government projects also contributing.
Home ownership amongst Saudi nationals was limited to 50 per cent three years ago, with recent government measures expected to result in 60 percent by next year and 70 per cent by 2030. For the remainder of this year, the kingdom’s GDP is expected to fall slightly due to shrinking oil production as well as the recent bombing of two major production hubs and an increase in regional geopolitical tensions.
In the meantime, the GCC in general is seeing an increase in interest in co-living facilities, mostly generated by expat millennials. Although the trend hasn’t yet hit Saudi Arabia, the UAE and Dubai are seeing new interest in recent constructions offering good facilities, high quality builds and affordable rents.
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