Saudi home transactions fall in Q2 2026: Knight Frank

Riyadh city

Knight Frank, the real estate consultancy, said activity in Saudi Arabia’s residential property market remained subdued in the second quarter of 2026, with transaction volumes and values below year-earlier levels.

Affordability pressures and continued regional uncertainty weighed on purchasing decisions, it said.

A total of 45,700 residential transactions were recorded across the Kingdom in the second quarter, down 12% from a year earlier but up 9% from the first quarter, according to Knight Frank’s latest analysis.

The total value of residential transactions reached 41.9 billion riyals, down 25% year-on-year (YoY) but up 6% quarter on quarter (QoQ).

Land accounts for a large share of activity

Knight Frank said residential land accounted for 23,100 transactions in the second quarter, or 51% of total residential transactions, with transaction value reaching SAR 21.7 billion, representing around 52% of the total residential transaction value while apartments accounted for 28.9% of transactions, while villas represented 11.3%.

The company said the increase in land transactions was a significant development, noting that changes to the White Land Tax system have increased incentives for landowners to bring undeveloped plots to market, with some opting to sell rather than bear the capital requirements and execution risks associated with developing the plots themselves.

The report also highlighted a growing trend among landowners to explore partnerships with developers to launch residential and mixed-use projects, representing a significant shift in how land enters the development cycle that could have implications for future housing supply across the Kingdom, Knight Frank said.

Residential sector performance remains mixed

Residential-sector performance remained mixed across the Kingdom's key housing markets during the second quarter. Riyadh recorded 10,670 residential transactions, down 2% YoY but up 23% from the previous quarter.

Transaction value reached SAR 14.3 billion, declining 14% YoY while increasing 8% quarter-on-quarter.

In Jeddah, transaction volumes fell 1% YoY to 6,670, while transaction value rose 31% to SAR 10.3 billion.

The Dammam metropolitan area recorded stronger activity, with transaction volumes rising 21% YoY to 3,900 and transaction value increasing 20% to SAR 4.9 billion.

Price performance was similarly mixed, with apartment values in Riyadh rising 3.1% YoY to SAR 6,369 per sqm while apartment values increased 1.2% in Jeddah and 2.8% in the Dammam metropolitan area.

Villa values, meanwhile, declined across all three markets, falling 2.2% in Riyadh, 1.4% in Jeddah, and 0.9% in the Dammam metropolitan area.

Future supply faces greater uncertainty over delivery timelines

Knight Frank expects Riyadh's housing stock to increase from around 2.81 million units in 2026 to 3.3 million units by 2030.

Over the same period, housing stock is expected to reach around 1.47 million units in Jeddah and 986,000 units in the Dammam metropolitan area, alongside continued supply growth in Makkah and Madinah.

The company said announced supply should be viewed against the changing cost environment facing developers, noting that construction raw material costs have risen about 20% since the start of the year, adding further pressure on project economics and potentially affecting both development decisions and delivery timelines.

As a result, scheduled supply should not necessarily be expected to reach the market within the originally projected timeframe, while the pace and composition of actual deliveries will become increasingly important in assessing the future balance between housing supply and demand.

Office rents rise in Riyadh and Jeddah

Riyadh’s office market remained undersupplied in the second quarter, with Grade A office rents rising 3.4% YoY to SAR 2,810 per square meter (sqm), while occupancy in the segment reached 97%.

Grade B office rents increased 2.3% to SAR 1,690 per sqm, with occupancy at 95%, bringing Riyadh’s overall office occupancy rate to 96%.

Jeddah also recorded rental growth, with Grade A office rents rising 3.1% YoY and Grade B rents increasing 6.2% while occupancy stood at 95% for Grade A offices, compared with 89% for Grade B.

The company said that despite continued high occupancy rates, the outlook has become more complex, with ongoing regional uncertainty prompting some occupiers to adopt a more cautious approach to expansion and long-term commitments.

At the same time, limited availability of high-quality space continues to support rental levels, Knight Frank said.

Future office supply

Knight Frank estimates Riyadh's office supply at around 6.1 million sqm in the second quarter of 2026.

Announced projects are expected to increase supply to around 10.6 million sqm by 2028, representing an increase of nearly 74%. Jeddah and the Dammam metropolitan area are also expected to see office supply increase over the same period.

The scale of future supply could significantly expand occupier options, particularly in Riyadh. However, project delivery timelines will remain an important factor amid rising construction costs and increased uncertainty in the operating environment.

Knight Frank said foreign investment activity continues to provide a potential source of long-term occupier demand, with 9,018 foreign investment licenses issued during the second quarter, up 252% YoY.

While these licenses do not directly translate into demand for office space, continued international business activity and the Regional Headquarters Program remain important factors for Riyadh's long-term commercial outlook.