The slowdown observed in the official indicators of the Saudi real estate market during the first six months of this year was not a surprise to observers, but rather came as a practical application of the 'rebalancing' phase that began taking shape in 2025. With major regulatory changes such as 'real estate registration' coming into effect, investors and developers are now undergoing a period of reassessment and cautious anticipation, ahead of a second half that experts expect to be driven by genuine demand in the residential and integrated logistics sectors.

In detail, data from the Real Estate Exchange under the Saudi Ministry of Justice (for property transfer) showed that the total value of real estate transactions during the first half of 2026 dropped to $21.9 billion (SAR 82.2 billion), compared to transactions worth $45.1 billion (SAR 169.4 billion) during the same period in 2025, representing a decline of 51.5 percent, the largest among indicators.

Road network in the Saudi capital (SPA)

This decline in values was also accompanied by a slowdown in trading activity, as the number of real estate transactions fell to 161,900 compared to 220,000 in the first half of the previous year, a decline of 26.4 percent, reflecting a clear slowdown in buying and selling activity within the market. The decline was not limited to the value and number of transactions, but extended to the volume of assets traded, as the number of traded properties decreased from 204,900 to 138,600, a decline of 32.4 percent, and the total traded area fell to 1.625 billion square meters compared to 2.088 billion square meters in the first half of 2025, a decline of 22.2 percent.

In terms of prices, official data revealed relative flexibility compared to transaction volumes; the average price per square meter fell to SAR 1,965 compared to SAR 2,217 during the same period last year, a decline of 11.4 percent, and the highest recorded price per square meter in transactions dropped from SAR 453,124 to SAR 330,578, a decline of about 27 percent.

Aerial photo showing the city of Riyadh (Reuters)

Reading the reasons for 'conscious anticipation'

In an attempt to explain this new dynamic, expert and real estate appraiser Eng. Ahmed Al-Faqih told Asharq Al-Awsat that this decline in the value and number of real estate transactions is 'very logical' given two critical factors that have emerged in recent months: first, the regional geopolitical events represented by the US-Iran war, and second, the actual impact of government decisions aimed at rebalancing the market, which has been reflected quantitatively and qualitatively in transactions.

Al-Faqih called for the need to differentiate between traded and non-traded assets, noting that exchange indicators show many investors transferring their assets to the 'non-traded' category in a state of preferring anticipation and repositioning based on market developments.

As for other economic variables such as interest rates and financing costs, Al-Faqih described them as 'side factors' compared to the geopolitical and regulatory files. He added: 'The real estate investor, especially the speculator, is currently going through a serious reassessment phase, especially with the government's explicit direction to develop the sector and correct practices. This direction will contribute to redirecting massive liquidity and injecting it into real development projects, increasing housing supply.'

Decline in trading is not a price correction

From a complementary perspective, expert and real estate enthusiast Abdullah Al-Mousa agreed with Asharq Al-Awsat that the decline in trading values by more than 51 percent cannot be interpreted as a 'direct reflection of a similar decline in prices'; reading the indicators requires greater depth. Al-Mousa notes that the market witnessed a pivotal institutional shift during the first half of 2026, represented by the expansion of the application of 'real estate registration' and the transfer of the execution of real estate transactions in key areas - foremost among them the capital Riyadh - to the real estate registry system, a fundamental variable that must be considered when making annual comparisons.

Al-Mousa cited the market's resilience as evidence that the average price per square meter dropped by only 11 percent, compared to a drop in transactions of more than half their value, confirming that the sector did not experience a sharp price correction, but rather a change in the 'composition of transactions themselves', due to a decline in huge billion-dollar transactions and high-value assets, against stable real estate prices in locations with genuine demand.

Accordingly, Al-Mousa asserts that the market is going through a phase of 'resorting' and not a general price correction, as liquidity has become more selective, and investors' compass has turned towards high-quality assets with better investment feasibility.

One of the 'National Housing' projects (SPA)

Second half of 2026

Looking to the near future, Al-Mousa expects the second half of 2026 to witness a gradual and qualitative improvement in real estate activity, ruling out a quick return to the record trading levels of previous years. He explained that the sector is going through a transitional phase led by regulatory reforms, increased transparency, and the development of the legislative framework, factors that enhance investor confidence in the medium term, although they require some time to show their full impact.

In conclusion of his analysis, Al-Mousa suggested that integrated residential projects that meet actual demand, along with the logistics and industrial sectors supported by economic growth and major projects, will steer growth in the coming period. He concluded that the market's success in the next phase 'will not be measured only by the volume and quantity of transactions, but by its ability to attract qualitative investments, improve asset utilization efficiency, and achieve a sustainable balance between supply and demand.'