Saudi residential market expected to witness the completion of a further 20,000 units in 2018 and 19,000 units 2019, according to consultants JLL.
According to the Saudi real estate market report, nearly 19,500, mostly stand-alone units were completed in the Saudi capital city in 2017, bringing the total residential stock to 1.2 million units.
The Ministry of Housing distributed nearly 55,200 units in Riyadh to facilitate home ownership in 2017. This assistance consisted of 23,600 completed and off-plan residential units, 6,600 developed residential land plots, and 25,000 subsidized housing loans.
JLL's report said: "This is a positive move towards improving home ownership rates in Riyadh, as the private market remains more focused upon high-end developments."
The number of Riyadh apartments transacted in 2017 increased by 12% compared to 2016, while prices decreased by 4% over the year. The number of villas transacted decreased nearly 16% in 2017, while prices declined by 5%.
JLL said villa and apartment rents remained unchanged in Q4 but decreased by 5% annually.
Further declines in rents can be expected following the introduction of the levy on expatriate dependents in mid-2017, the report highlights.
"This resulted in some expatriates repatriating family members, and relocating to smaller units and bachelor studios. Resulting in a general shift in the market from larger, family units (3 bedrooms), to smaller units,” the report noted.
“Demand will likely continue to weaken as the levy progressively increases over the next three years.”
In Jeddah, residential supply increased by around 10,000 units to 813,000 units in 2017.
Though residential sale prices and rents declined across the Jeddah market, JLL observes signs of stabilization with the market, with the rate of decline slowing towards the end of the year.
Apartment rents in the city showed a 2.7% quarterly dip in areas synonymous with expatriates, though rents remained relatively stable across Jeddah in in the fourth quarter of 2017.
"The tax levy on expatriates could be restricting demand for rentals, as expatriates repatriate family members to avoid the levy," JLL added.