Residential Construction Boom: Meeting Saudi Arabia’s Housing Demand
Saudi Arabia is experiencing a residential construction boom as strong housing demand reshapes the real estate market in 2025. In the first half of the year, nearly 93,700 housing transactions were completed, representing a 7% year-on-year growth, with a total value of US$20.6 billion (SAR77.5 billion).
The government is accelerating housing supply to meet rising demand. In H1 2025, the Sakani platform introduced 26,000 new off-plan units. Giga projects, such as NEOM, Qiddiya and SEDRA Community, are adding significant residential capacity. They are also creating entirely new urban districts. These initiatives directly support Vision 2030 homeownership targets. The surge in residential construction is expanding housing stock, modernizing cities and improving living standards across the Kingdom. This blog highlights the residential construction boom in Saudi Arabia and examines how rising housing demand is reshaping the real estate market.
Saudi Vision 2030 Driving Construction Demand
Saudi Vision 2030 continues to drive housing demand through targeted programs and financial support. By the end of 2024, the homeownership rate reached 65.4%, surpassing the 2025 interim target of 65%. The Housing Program, managed through the Sakani platform, aims to increase the share of Saudi families owning homes to 70% by 2030.
In the first half of 2025, the Ministry of Municipalities and Housing (MOMAH) launched around 26,000 off-plan housing units through the Sakani platform. Nearly 9,200 units were delivered to beneficiaries. Over 5,200 residential plots were also made available, bringing the total to more than 170,000 plots. Over 48,000 Saudi families moved into their first homes during this period. These efforts are boosting housing supply and supporting Vision 2030’s homeownership target.
The National Housing Company (NHC), established by MOMAH, is a key enabler of this boom. It leads large-scale residential and mixed-use projects nationwide, such as Dahiyat AlFursan and Dahiyat Khuzam in Riyadh and Dahiyat Makkah Gate in Makkah. With a US$40 billion development pipeline, NHC delivers integrated communities with modern infrastructure and amenities.
Saudi Giga Projects Reshaping Housing Landscape
Giga projects in Saudi Arabia are powering housing transformation under Vision 2030. According to Knight Frank’s 2025 Giga Projects Report, contract awards surged to US$196 billion this year, a 20% increase from 2024. On the western coast, 17 giga-projects, including NEOM, The Red Sea Project, and Qiddiya, have attracted US$431.3 billion in announced investment since 2016.
US$57 billion has already been awarded in contracts and US$187.2 billion is in the pipeline. By 2030, these developments are expected to deliver more than 382,500 new homes, along with large-scale office, retail, and hotel space. NEOM continues to draw interest, while other giga projects, such as SEDRA Community and Qiddiya City, are also gaining attention. Many buyers are willing to pay a premium. Giga-projects are becoming serious drivers of housing growth. They support both home supply and long-term population expansion.
Challenges in Meeting Market Demand
Saudi Arabia’s residential construction sector is experiencing strong growth, but several constraints remain. Rising construction costs are a significant factor. According to the General Authority for Statistics (GASTAT), the Construction Cost Index increased 1.1% in June 2025 compared to the same month last year, while energy costs surged 27.3% due to higher diesel prices. Labor shortages are intensifying the issue. Demand for skilled trades is high, driving up wages and affecting project timelines.
Affordability continues to challenge the market. Home prices and borrowing costs are rising, limiting access for first-time buyers. Land-plot prices climbed 5.3% in Q1 2025 and villa prices increased 10.3%, according to GASTAT. Regulatory measures, including new zoning rules and tax policies, aim to balance high-end and affordable housing. At the same time, coordinating large-scale infrastructure with rapid housing development adds complexity. Together, these factors present a sustained challenge to meeting housing demand across the Kingdom.
Outlook and Opportunities
Despite the challenges, the Saudi residential market is set for continued expansion in the coming years. Developers are responding to strong demand with more master-planned communities and mixed-use housing. Projects in major cities are accelerating, supported by Vision 2030 initiatives and infrastructure development. Innovation in construction, including modular building and sustainable design, is likely to help reduce costs and speed delivery.
New policies are creating further opportunities. Starting January 2026, non-Saudis will be allowed to own property in designated zones. Foreign residents can buy one residential property outside restricted areas, subject to regulatory approval. This broadens the buyer base and encourages new investment. Combined with strong demand and large-scale developments, these measures position the residential sector for sustained growth through 2025 and beyond.
Conclusion
The residential construction boom in Saudi Arabia reflects a dynamic combination of strong demand, Vision 2030 initiatives and large-scale giga-project developments. While certain challenges remain, the growth of master-planned communities is creating new opportunities. With sustained investment, innovation, and strategic planning, the Kingdom is well-positioned to meet housing demand, enhance urban living standards and achieve its 70% homeownership target by 2030. Get in touch with SCAVO to access the latest Saudi construction market updates and discover emerging opportunities.
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