The slowdown observed by official indicators of the Saudi real estate market during the first six months of this year came as no surprise to observers, but rather as a practical application of the "rebalancing" phase that began to take shape back in 2025. With major regulatory changes such as "real estate registration" coming into effect, investors and property developers are now going through a period of recalculations 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 affiliated with the Saudi Ministry of Justice (for the property transfer category) showed a decline in the total value of real estate transactions during the first half of 2026 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 the indicators.

A 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 transaction values and numbers, but extended to the volume of assets traded, as the number of properties traded dropped from 204,900 to 138,600 properties, a decline of 32.4 percent. Similarly, 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.

Regarding 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. The highest recorded price per square meter in transactions also dropped from SAR 453,124 to SAR 330,578, a decline of about 27 percent.

An aerial view showing Riyadh (Reuters)

Reading the reasons behind "cautious anticipation"

In an attempt to explain this new dynamic, real estate expert and appraiser engineer Ahmed Al-Faqih, in a statement to Asharq Al-Awsat, considered this decline in the value and number of real estate transactions as "very logical" given two decisive 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 trading.

Al-Faqih called for the necessity of distinguishing between traded and non-traded assets, noting that Exchange indicators show many investors have converted their assets to the "non-traded" category in a state of preferring to wait and reposition 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 recalculation phase, especially with the government's clear direction to develop the sector and correct practices within it. This approach will contribute to redirecting massive liquidity and channeling it into real development projects and increasing housing supply."

Decline in trading is not a price correction

From a complementary perspective, expert and real estate enthusiast Abdullah Al-Mousa agreed in his statement to Asharq Al-Awsat that the decline in trading values by more than 51 percent cannot be interpreted as a "direct reflection of a proportional 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, characterized by the expansion of the application of "real estate registration" and the transfer of real estate transactions in key areas—led by the capital Riyadh—to the Real Estate Register system, a fundamental variable that must be taken into account when making annual comparisons.

Al-Mousa cited the market's resilience by noting that the decline in the average price per meter by only 11 percent, compared to a drop in trading of more than half its value, confirms that the sector has not undergone a sharp price correction, but rather a change in the "composition of the transactions themselves," due to a decrease in huge billion-dollar deals and high-value assets, while property prices remained stable in locations with genuine demand.

Accordingly, Al-Mousa asserts that the market is going through a phase of "re-sorting" and not a general price correction, as liquidity has become more selective and investors' focus has shifted towards high-quality assets with better investment viability.

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

The second half of 2026

Looking ahead 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 driven by regulatory reforms, increased transparency, and the development of the legislative framework—factors that boost investor confidence in the medium term, although they require some time to fully materialize.

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 solely by the volume and quantity of trading, but by its ability to attract quality investments, enhance the efficiency of asset utilization, and achieve a sustainable balance between supply and demand."