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

In detail, data from the Saudi Ministry of Justice's real estate exchange (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) during the same period in 2025, representing a decline of 51.5%, the largest among indicators.

Road network in the Saudi capital (SPA)

This decline in values was also accompanied by a decrease 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%, reflecting a clear slowdown in buying and selling activity within the market. The decline was not limited to the value and number of transactions but extended to the volume of assets traded, as the number of properties traded decreased from 204,900 to 138,600, a decline of 32.4%, and the total area traded 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%.

Regarding 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%, and the highest recorded price per square meter in transactions dropped from SAR 453,124 to SAR 330,578, a decrease of about 27%.

Aerial view of Riyadh (Reuters)

Reading the reasons for 'cautious anticipation'

In an attempt to explain this new dynamic, real estate expert and appraiser 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 recently emerged: 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 stressed the need to distinguish between traded and non-traded assets, noting that exchange indicators show many investors moving 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: 'Real estate investors, especially speculators, are currently going through a serious reassessment phase, especially with the government's clear direction to develop the sector and correct practices. This direction will help redirect massive liquidity into real development projects and increase housing supply.'

Decline in trading is not a price correction

From a complementary perspective, real estate expert and enthusiast Abdullah Al-Mousa told Asharq Al-Awsat that the decline in transaction values by more than 51% cannot be interpreted as a 'direct reflection of an equivalent price decline'; reading the indicators requires greater depth. Al-Mousa noted that during the first half of 2026, the market witnessed a pivotal institutional transformation with the expansion of 'real estate registration' implementation, and the transfer of real estate transactions in major areas - especially the capital Riyadh - to the real estate registry system, a fundamental change that must be considered when making annual comparisons.

Al-Mousa argued that the market's strength is demonstrated by the fact that the average price per square meter fell only 11%, 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 in locations with real demand remained stable.

Based on that, Al-Mousa asserts that the market is going through a phase of 're-sorting' rather than a general price correction, as liquidity has become more selective and investors' compass has turned towards high-quality assets with better investment returns.

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

Second half of 2026

Looking ahead, 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 undergoing a transitional phase driven by regulatory reforms, increased transparency, and the evolution of the legislative framework, factors that enhance investor confidence in the medium term, even though they require some time to fully materialize.

In conclusion, Al-Mousa suggested that integrated residential projects meeting actual demand, along with the logistics and industrial sectors supported by economic growth and major projects, will lead 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.'