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

In detail, data from the Real Estate Exchange under the Saudi Ministry of Justice (for the category of property transfer) 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) in the same period of 2025, representing a decline of 51.5 percent, the largest among indicators.

A road network in the Saudi capital (SPA)

This decline in values was also accompanied by a slowdown in the pace of traded activity, as the number of real estate transactions fell to 161.9 thousand transactions compared to 220 thousand transactions 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 fell from 204.9 thousand properties to 138.6 thousand properties, 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.

On the price front, official data revealed 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, while the highest price per square meter recorded in transactions dropped from SAR 453,124 to SAR 330,578, a decline of about 27 percent.

An aerial view showing the city of Riyadh (Reuters)

Reading into the reasons for 'cautious anticipation'

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' in light of two decisive factors that have emerged recently: first, regional geopolitical events, namely 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 to distinguish between traded and non-traded assets, noting that market indicators show many investors converting 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 undergoing a serious recalculation phase, especially with the government's explicit direction to develop the sector and correct practices within it. This direction will contribute to redirecting massive liquidity and injecting 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 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 during the first half of 2026, the market witnessed a pivotal institutional shift represented by the expansion of the application of 'in-kind 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 taken into account when making annual comparisons.

Al-Mousa argued for the market's strength by noting that the decline in the average price per square meter by only 11 percent, compared to the drop in trading by more than half its value, confirms 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 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 shifted toward 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 driven 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 way 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 trading, but by its ability to attract quality investments, improve asset utilization efficiency, and achieve a sustainable balance between supply and demand.'