RIYADH — Saudi Arabia’s real estate market will see a healthy correction in 2019 after prices surged in the past few years, Islam Albayaa, Head of Advisory, KPMG Al Fozan & Partners in Saudi, said in a statement.

“This correction is expected to continue over the short-term, but the market will pick up in the medium to long term, given the recent government initiatives to incentivize the sector, particularly the Ministry of Housing initiatives,” he noted.

Last November, Saudi Arabia’s Ministry of Housing announced plans to build nearly 19,500 residential units for its citizens through “Sakani”, its major housing development program. Additionally, new real estate projects are planned through public-private-partnerships.

On the other hand, the Public Investment Fund, the Kingdom’s sovereign wealth fund, has been at the forefront of launching large-scale projects such as Qiddiya, the Red Sea and NEOM.

“These gigaprojects will promote the property market in the newly developed locations especially the second home concept in the Kingdom. Moreover, some of those projects will introduce new asset classes that will increase the real estate investment alternatives,” Albayaa noted.

Back in the capital, the launch of Riyadh Metro has been a blessing for property owners, as the market witnessed land price appreciation for locations closer to the metro stations.

“Research shows that prices per square meter of residential land parcels in districts closer to the metro stations witnessed a slight increase compared to last year. Moreover, by reviewing some relevant benchmarks, we can deduce that residents tend to live closer to metro stations, therefore, increasing the prices of residential units in the vicinity of such stations,” he added.

While villas have historically been more popular in Saudi Arabia than apartments, a new trend is emerging with young Saudis switching from traditional detached residential units towards smaller units including duplexes, townhouses and affordable apartments.

“The current economic slowdown and changing mindsets of the youth are driving the new trend. Besides, private investors tend to develop either regular or luxury apartments since they are less price sensitive to the current market volatility,” Albayaa averred. — SG