The slowdown observed in official indicators of the Saudi real estate market during the first six months of this year was not surprising to observers; rather, it came as a practical application of the 'rebalancing' phase that began to emerge in 2025. With major regulatory changes such as 'real estate registration' coming into effect, investors and developers are now going through a period of recalculation and conscious watchfulness, ahead of a second half that experts expect will be driven by real demand in integrated residential and logistics sectors.

In detail, data from the Real Estate Exchange affiliated with the Saudi Ministry of Justice (for the property transfer category) showed that the total value of real estate transactions during the first half of 2026 fell 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, 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 drop of 26.4 percent, reflecting a clear slowdown in buying and selling activity in the market. The decline was not limited to the value and number of transactions but extended to the volume of assets traded: the number of traded properties decreased from 204,900 to 138,600, a drop 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 showed relative flexibility compared to the volume of transactions; the average price per square meter fell to SAR 1,965 compared to SAR 2,217 in the same period last year, a decline of 11.4 percent. The highest recorded price per square meter in transactions fell from SAR 453,124 to SAR 330,578, a drop of about 27 percent.

Aerial photo showing Riyadh (Reuters)

Reading into the reasons for 'conscious caution'

In an attempt to explain this new dynamic, real estate expert and appraiser engineer 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, regional geopolitical events represented by the US-Iran war, and second, the actual impact of government decisions aimed at rebalancing the market, which has affected trading both quantitatively and qualitatively.

Al-Faqih called for the necessity of distinguishing between traded and non-traded assets, noting that exchange indicators show many investors converting their assets to the 'non-traded' category in a state of preferring caution 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: "Real estate investors, especially speculators, are currently going through a serious recalculation phase, especially with the government's clear direction to develop the sector and correct practices within it. This direction will contribute to redirecting large liquidity and injecting it into real development projects and increasing housing supply."

Decline in trading is not a price correction

From a complementary perspective, real estate expert and 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 noted 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 implementation of real estate dispositions in major areas—led by the capital Riyadh—to the real estate registry system, a fundamental variable that must be taken into account when making annual comparisons.

Al-Mousa cited the market's resilience by pointing out that the average price per square meter fell 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 deals and high-value assets, while property prices remained stable in locations with real demand.

Based on that, Al-Mousa asserts that the market is undergoing a 're-sorting' phase, not a general price correction, as liquidity has become more selective and investors' compass has turned toward high-quality assets with better investment feasibility.

One of the projects of the National Housing Company (SPA)

Second half of 2026

Looking ahead to the near future, Al-Mousa expects the second half of 2026 to see 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, even though they require some time for their full impact to appear.

In conclusion, 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 lead the growth in the coming period. He concluded that the market's success in the next phase 'will not be measured by the volume and quantity of transactions alone, but by its ability to attract quality investments, improve the efficiency of asset use, and achieve a sustainable balance between supply and demand.'