Institutional funds rare in 'opaque' Saudi market

"Many deals occur off market" in the kingdom's property sector, a Knight Frank expert said, adding Vision 2030 could impact local real estate trends

Vision 2030 could alter real estate trends in Saudi. [Representational image]
Vision 2030 could alter real estate trends in Saudi. [Representational image]

Saudi Arabia's "opaque" property market is gradually maturing, an expert from property consultancy Knight Frank said. 

However, the implementation of white land tax has "complicated things" in the kingdom, Knight Frank added in a statement. 

Alexandros Arvalis, associate partner for commercial valuations at Knight Frank, added: "The Saudi Arabian market is an emerging and slowly maturing real estate market, which has specific difficulties and challenges.

"The market here is very opaque; information is not openly shared and institutional investment is relatively rare due to land ownership structure, and lack of planning controls.

"Many deals occur off market." 

According to Knight Frank's statement, the white land tax has led to a reduction in land prices in some locations, "since they had been changed hands with an aim for quick profit rather than development".

Furthermore, the kingdom's implementation of Deputy Crown Prince Mohammad bin Salman's Vision 2030 reforms plan could also alter local real estate trends. 

As an impact of the programme, privatisation could "open the road for more effective real estate strategy"; hotels could be developed to spur religious tourism; land plots could be allocated for renewable energy; affordable housing could expand; and, the kingdom's logistics sector could grow. 

Arvalis explained: "Saudi has ambitious plans for growth and expansion with a number of large development projects in the pipeline.  

"Accurate property valuations are critical in providing confidence to local and international investors, as these valuations are required to support their investment decisions and financing." 

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