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

In detail, data from the Real Estate Exchange under the Saudi Ministry of Justice (for property transfer category) showed that the total value of real estate transactions during the first half of 2026 declined to $21.9 billion (SAR 82.2 billion), compared to transactions worth $45.1 billion (SAR 169.4 billion) in the same period of 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 decrease in the volume of 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 in the market. The decline was not limited to the value and number of transactions but extended to the volume of traded assets, 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 volume; 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, while the highest recorded price per square meter in transactions dropped from SAR 453,124 to SAR 330,578, a decline of about 27 percent.

An aerial view of Riyadh (Reuters)

Reading into the reasons for 'conscious anticipation'

In an attempt to explain this new dynamic, expert and real estate 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, 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 both quantitatively and qualitatively in trading.

Al-Faqih called for the necessity of distinguishing between traded and non-traded assets, noting that stock exchange indicators show many investors transferring 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: 'Real estate investors, especially speculators, are currently going through a serious reassessment phase, particularly 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 residential 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 noted that the market witnessed a pivotal institutional transformation during the first half of 2026, represented by the expansion of applying 'real registration' and the transfer of execution of property transactions in major areas - led by the capital Riyadh - to the real estate register system, a fundamental variable that must be considered when making annual comparisons.

Al-Mousa cited the market's strength by noting that the average price per meter declined by only 11 percent, against a drop in trading of more than half its 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 in locations with genuine demand remained stable.

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

A project 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 rapid return to the record trading levels of previous years. He explained that the sector is in 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 if they require some time to show their full effect.

In conclusion, Al-Mousa predicted that integrated residential projects meeting 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 trading volume and quantity alone, but by its ability to attract quality investments, improve asset utilization efficiency, and achieve a sustainable balance between supply and demand.'