Property price gap opens up in Saudi

A large gap in property prices in different regions of Saudi Arabia, one of the world’s largest construction markets, has been revealed.

The most notable discrepancy was in prices of homes in the country’s two biggest cities, Jeddah and the capital Riyadh. Both cities are seeing a building boom and attracting growing numbers of British construction firms.

An average house in Riyadh cost four times the price of a comparable property in Jeddah, according to a new real estate price index for Saudi, which the compilers say is the first of its kind. The research by Cityscape Intelligence found that Saudi property has yielded 8% a year since 2007.

The comparisons of property prices showed that while the average price of a three bedroom home in Jeddah is SAR292,500 (£52,000), in Riyadh the same type of house would cost closer to SAR1.6m (£285,000), a huge difference of SAR1,307,500 or 447%.

The gap was also apparent, although less pronounced, in the rental market. Rental prices of three bedroom apartments in Jeddah are on average SR24,000 per unit, while the same in Riyadh is SAR52,000 per unit, a difference of 116%.

Moira Robertson, project director of Cityscape Intelligence, said, “No real estate price index like this existed in Saudi Arabia until we commissioned our own research. It was therefore surprising to find that the market has yielded on average 8% per annum clearly avoiding the boom bust that some other Gulf markets have suffered.”

Saudi has construction projects totaling more than £256bn either under construction or out to tender, according to research firm Proleads.

The research compares real estate sales and leasing prices in 18 areas across Jeddah and Riyadh and compares office and residential asset classes, tracking prices back to 2007.