Saudi Arabia’s residential real estate market recorded a sharp slowdown in activity during the first quarter of 2026, with transaction volumes and values declining significantly year-on-year, according to Knight Frank. The Saudi residential market posts sharp slowdown in Q1 2026 as affordability pressures, weaker mortgage demand and regional economic uncertainty weighed on residential activity.
Saudi Residential Market Activity Slows in Q1 2026
According to Knight Frank, residential transaction volumes in Saudi Arabia fell by 50% year-on-year to 29,490 deals during Q1 2026. Meanwhile, the total value of residential transactions declined by 57% to SAR 22 billion.
The slowdown was particularly pronounced in Riyadh, where both transaction volumes and values dropped by 82% compared with the same period in 2025. Weaker market activity was also recorded across Jeddah, the Dammam Metropolitan Area, Makkah and Madinah.
Knight Frank attributed the decline to growing housing affordability pressures and weaker mortgage demand. Negative market sentiment linked to the regional conflict also contributed to softer residential demand during the quarter. Despite the decline in transaction activity, residential prices continued to record annual growth across several major Saudi markets.
Key Residential Market Indicators in Q1 2026
Indicator | Q1 2026 | YoY Change |
|---|---|---|
Indicator Residential transactions | Q1 2026 29,490 deals | YoY Change -50% |
Indicator Residential transaction value | Q1 2026 SAR 22 billion | YoY Change -57% |
Indicator Riyadh transaction volumes and values | Q1 2026 — | YoY Change -82% |
Indicator Riyadh apartment prices | Q1 2026 — | YoY Change +6.3% |
Indicator Riyadh villa prices | Q1 2026 — | YoY Change +4.9% |
Indicator Jeddah apartment prices | Q1 2026 — | YoY Change +2.0% |
Indicator Dammam Metropolitan Area apartment prices | Q1 2026 — | YoY Change +2.3% |
Residential Prices Continue to Rise
While transaction activity weakened, residential prices remained relatively resilient across the Kingdom’s major markets. In Riyadh, apartment prices increased by 6.3% year-on-year during Q1 2026, while villa prices rose by 4.9%. Apartment prices also recorded annual growth of 2% in Jeddah and 2.3% in the Dammam Metropolitan Area.
Knight Frank noted that these gains reflected price resilience during January and February, before the impact of the regional conflict intensified. The consultancy added that the full effect of these developments has yet to be reflected in aggregate transaction data.
National Housing Co. Supports Residential Supply Growth
Despite the slowdown in transactions, residential supply continues to expand across the Kingdom. Knight Frank identified the National Housing Co. as the primary driver of residential supply growth, supported by the development and delivery of integrated housing communities across multiple regions.
Residential Stock Forecast
Region | 2025 | 2030E |
|---|---|---|
Region Riyadh | 2025 2.7 million units | 2030E More than 3.3 million units |
Region Jeddah | 2025 — | 2030E 1.47 million units |
Region Dammam Metropolitan Area | 2025 — | 2030E Nearly 1 million units |
The projected increase in residential stock is expected to provide additional housing options as Saudi Arabia continues to develop its residential infrastructure and respond to long-term housing demand.
Riyadh Office Market Remains Resilient
While the residential sector experienced a notable slowdown, Saudi Arabia’s office market maintained strong fundamentals during Q1 2026, particularly in Riyadh. Grade A office rents in Riyadh reached SAR 2,770 per square metre, representing a 2.5% year-on-year increase. The occupancy rate remained high at 97%.
Key Riyadh Office Market Indicators
Indicator | Q1 2026 | YoY Change |
|---|---|---|
Indicator Grade A office rents | Q1 2026 SAR 2,770/sqm | YoY Change +2.5% |
Indicator Occupancy rate | Q1 2026 7% | YoY Change — |
Knight Frank attributed the resilience of Riyadh’s office market to sustained occupier demand combined with limited availability of high-quality institutional office space.
Riyadh Office Supply Set for Expansion
Knight Frank expects Riyadh’s office market to enter a new phase over the coming years as major developments currently under construction are completed.
Year | Riyadh Office Stock |
|---|---|
Year 2025 | Riyadh Office Stock Around 6 million sqm |
Year 2032E | Riyadh Office Stock More than 10.6 million sqm |
The expected expansion will give tenants greater choice while supporting Saudi Arabia’s broader economic growth objectives and the continued development of Riyadh as a major business hub.
Saudi Real Estate Market Outlook
The Q1 2026 figures point to a clear divergence within Saudi Arabia’s real estate market. Residential transaction activity weakened substantially amid affordability challenges, softer mortgage demand and changing market sentiment, while residential prices remained resilient across key markets.
At the same time, Riyadh’s office sector continued to demonstrate strong fundamentals, supported by high occupancy and sustained demand. With residential supply expected to expand and significant office developments in the pipeline, market conditions are likely to continue evolving as new projects are delivered.
Overall, the Saudi residential market posts sharp slowdown in Q1 2026, with transaction volumes falling 50% and values declining 57%, even as residential prices continued to rise in major cities. The coming quarters will provide a clearer picture of how affordability, demand conditions and regional developments shape the Kingdom’s real estate market.
