According to a recent report from S&P, Saudi Arabia is poised to experience higher off-plan sales, leading to an uptick in developers’ revenue and profit margins.

Off-plan development offers the advantage of pre-financing construction, facilitating quicker cash collection and reducing developer risk, thereby meeting the sector’s funding requirements.

Read this also : Bloom Holding Sells Out Sixth Phase of Bloom Living, Olvera

In the first half of 2023, off-plan transactions surged by 52% across the kingdom, with an anticipated continued growth trajectory supported by a reported 9% increase in off-plan developer numbers during the same period.

Although off-plan sales are on the rise, they have not yet significantly disrupted the market due to prevailing buyer preferences for fully completed homes, coupled with factors such as limited trust and knowledge of the process, and rising interest rates, according to S&P.

Read this also : Dubai’s Housing Delivery to Reach 35,000 Units by 2024 on Account of High Investor Demand

However, by the end of the decade, substantial financing needs are expected to arise, driven by the scale of Saudi Arabia’s ambitious real estate projects and projected population growth.

S&P foresees heightened capital acquisition efforts across the market, with sovereign entities, government organizations like the Public Investment Fund, and real estate firms expected to issue substantial debt annually.

Read this also : RAK’s Hilton, Al Hamra to Launch 43 Ultra-Luxury Apartments

This trend is anticipated to broaden the spectrum of funding sources, accelerating the growth of the domestic capital market and increasing reliance on foreign debt.

Saudi Arabia’s real estate market is deemed more stable than Dubai’s, with less vulnerability to sudden demand fluctuations due to its larger and more stable population base.

With only 42% of foreigners in Saudi Arabia compared to over 90% in Dubai, potential fluctuations in foreign residency, particularly during economic downturns, are unlikely to exert significant pressure on property values.

Moreover, government initiatives, notably Vision 2030’s goal of achieving 70% home ownership among Saudi nationals, continue to drive housing demand.

S&P expects continued government support for new housing supply and associated funding initiatives, reinforcing the overall demand for housing in the kingdom.