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Saudi Arabia is in the midst of a construction boom that aims to transform the wider economy. The country has been investing substantially in large-scale infrastructure projects, led by Vision 2030. However, the residential construction segment also underwent significant growth expansion following several years of muted growth in 2019. One of the key growth drivers for the residential construction industry in Saudi Arabia has been the recent uptick in activity by the government.
The Saudi Arabia government launched a number of financing initiatives and regulatory reforms to provide affordable housing to its citizens. In May 2021, the government announced to develop one million residential units in five years. This along with evolving housing preferences, as the younger population moves away from extended families to a more nuclear family, ConsTrack360 expects the demand for smaller housing units to further increase in Saudi Arabia.
Government housing program supported the market growth
The Ministry of Housing in Saudi Arabia launched the Sakani housing program in 2017 with the aim to increase homeownership in the Kingdom. In the first ten months of 2020 alone, more than 101,000 families purchased a fully constructed house built under the Sakani housing program. Moreover, more than 60,000 families took advantage of the subsidized mortgage offered by the Saudi government to build their own houses in 2020.
ConsTrack360 expects the trend to continue in 2021 as well, as the Housing Ministry plans to increase homeownership in the country to 70% by 2030. In 2020, the government undertook more than 90 residential construction projects across Saudi Arabia. These projects plan to provide more than 140,000 housing units over the next few years. This along with 209 residential land plans will also provide Saudi families with 176,000 plots for self-construction activities.
However, in the first quarter of 2020 itself, the government has been able to provide affordable housing to more than 70,000 families in the country. Thus, surpassing their initial estimates of 51,000 families. Therefore, despite the economic downturn caused by the global pandemic, the residential construction market is expected to continue its upward trajectory in the Kingdom, largely due to the Sakani housing program.
Large under-construction residential projects to expand the market growth
In addition to the affordable housing units built under the Sakani housing scheme, Saudi Arabia is also experiencing strong growth in the high-end, premium housing units. For instance, King Salman Park, one of the largest infrastructure projects, will also house 12,000 premium residential units.
Jeddah Tower, which is set to become the tallest building in the world, will be a mix of hotels, serviced apartments, and premium residential units. Al Widyan, dubbed as the city within a city, will also consist of 20,000 low and high-rise residential units. Jabal Omar once completed will also consist of residential units. With all of these residential units under construction, the outlook for the residential market remains positive.
With the aim of the government to boost homeownership in the country, the outlook for the residential construction market remains upbeat. This coupled with subsidized mortgage rates and regulatory reforms in the country, ConsTrack360 expects the residential construction industry to maintain strong growth in the long-term perspective.
To know more and gain deeper understanding of residential construction in Saudi Arabia, click here.
