The slowdown recorded by 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 has been emerging since 2025. With major regulatory changes such as 'in-kind registration' coming into effect, real estate investors and developers are today going through a period of recalculations and conscious anticipation, ahead of a second half that experts expect to be driven by real demand in the residential and integrated logistics sectors.

In detail, data from the Real Estate Exchange (for property transfer category) of the Saudi Ministry of Justice 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 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 paralleled by a slowdown in trading activity, as the number of real estate transactions fell to 161,900 deals compared to 220,000 deals 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 value and number, but extended to the volume of traded assets, as the number of traded properties decreased from 204,900 to 138,600 properties, a drop 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.

In terms of prices, official data showed relative flexibility compared to transaction volume; 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 price per square meter recorded in transactions dropped from SAR 453,124 to SAR 330,578, a decrease of about 27 percent.

Aerial view showing the city of Riyadh (Reuters)

Reading into the causes of 'conscious anticipation'

In an attempt to explain this new dynamic, expert and real estate appraiser Eng. Ahmed Al-Faqih, in a statement to Asharq Al-Awsat, believes 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 reflected quantitatively and qualitatively on trading.

Al-Faqih called for the need to distinguish 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 recalculation phase, particularly with the government's explicit direction to develop the sector and correct practices in it. This direction will contribute to redirecting huge liquidity and pumping it into real development projects, increasing the housing supply.'

Decline in trading is not a price correction

From a complementary perspective, expert and real estate enthusiast Abdullah Al-Mousa, in his statement to Asharq Al-Awsat, agrees that the decline in trading values by more than 51 percent cannot be interpreted as a 'direct reflection of an equal decline in prices'; reading the indicators requires greater depth. Al-Mousa notes that during the first half of 2026, the market witnessed a pivotal institutional transformation represented by the expansion of applying 'in-kind registration' and the transfer of real estate transactions in key areas - foremost the capital Riyadh - to the real estate registry system, a fundamental change that must be considered when conducting annual comparisons.

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

Accordingly, Al-Mousa asserts that the market is going through a phase of 'resorting' rather than 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 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 experiencing 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 effect.

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 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 trading alone, but by its ability to attract quality investments, improve the efficiency of asset use, and achieve a sustainable balance between supply and demand.'