- Q1 sales slump by 50%
- Aiming to draw foreign investors
- Iran war having big impact
Saudi Arabia’s property market has slumped, with transactions halving in the first quarter and March sales down nearly two-thirds year on year, as regional tensions dent investor confidence just as the kingdom was opening to overseas investors.
The country sold 29,000 homes last quarter, down 50 percent compared with the same period in 2025, according to data published by the Ministry of Justice (MoJ). Transaction figures for March, after the war had started, dropped 62 percent year on year with 7,200 homes sold.
This year was supposed to mark Saudi Arabia’s big real estate push, following a suite of reforms last year designed to drive down prices and rents. New rules were published at the start of this year to open the property market to foreign investors. By 2030, the goal is to have real estate bring in about $85 billion a year in overseas property investment, up from MoJ’s reported $38 billion in 2025.
But since the Iran war started, those plans appear to have stalled. A document detailing exactly where foreigners could buy in Saudi Arabia is yet to be published, despite its release being planned for the first quarter.
Brokers now write on LinkedIn they expect to have it this quarter instead. At the time of writing, the government’s “Saudi Properties” website, launched in January as the portal for foreigners to buy homes, is offline.
“The war is probably playing a big part in some of these decisions to push back milestones,” said Faisal Durrani, real estate consultancy Knight Frank’s head of research for Mena. “This is Saudi’s big moment, and it might make more sense to do it under more positive circumstances.”
The country’s giga-projects are being designed, in part, as places for foreigners to buy holiday homes. Two projects have launched sales: Diriyah Gate outside Riyadh and The Red Sea on the coastline of the same name.
Even if sales have slowed in the kingdom, these giga-projects have managed to make billions from selling off-plan homes.
Diriyah, according to MoJ data, has sold 1,700 homes since 2023, with 554 that year, 763 in 2024 and 336 homes last year.
Ministry data suggests Diriyah has recorded about $4.5 billion in transactions since 2023, with close to an equal split between commercial and residential real estate. Group CEO Jerry Inzerillo has said previously he wants half of the project’s $63 billion price tag to be covered by foreign investors.
For the first three months of this year, 38 homes sold in Diriyah, compared with 170 in the same period last year, a 77 percent drop.
Diriyah did not respond to AGBI’s requests for comment.
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MoJ data for The Red Sea is harder to define, but Red Sea Global told AGBI it has had SAR1.8 billion ($480 million) in residential sales and SAR2 billion pending. A spokesperson said foreigners accounted for 20 percent of those transactions, stating: “We have not observed any impact on demand from recent regional developments and our launch schedules remain unchanged.”
Diriyah eventually plans to deliver 18,000 homes, while The Red Sea plans 1,000. So far, Red Sea has 305 units on its main island.
Saudi locals are willing to pay up to SAR1.5 million for a home in the kingdom, while high-net-worth foreigners will pay up to $1 million, according to Knight Frank research.
“We remain concerned about an oversupply of luxury housing in the market,” Durrani said.
“Demand created for housing helped drive spikes in values for land. Very often, developers, to make plans work financially, had to go down the route of luxury housing. That has created gaps between what people are willing to spend, and what developers are planning to deliver.”