One-bedroom apartments in Saudi Arabia’s West Riyadh and North Jeddah now command the highest rental yields across the Gulf as demand for housing in the largest Arab economy surges.
Although rents in Saudi Arabia are still relatively low compared with other countries in the region, they nonetheless grew by more than 10 percent last year.
The cost of renting an apartment in the capital Riyadh could be between a quarter and half of one in Dubai, for example, but that gap is narrowing.
Rental yields for one-bedroom properties in North Jeddah and West Riyadh climbed to 13.1 percent and 11.3 percent respectively in the fourth quarter of last year, according to Saudi real estate company Sakan.
Demand for property in Saudi cities is surging as people are moving to the kingdom from overseas, as well as relocating from within the country. At the same time, Saudi Arabia’s non-oil economy is growing and creating new employment opportunities, with Riyadh the primary urban magnet.
Saudi Arabia needs to build 115,000 new homes to keep up with demand, according to real estate consultancy Knight Frank.
The Saudi government is also seeking to increase home ownership among nationals as part of its Vision 2030 economic and social targets. It has introduced new mortgage schemes and home ownership initiatives that have increased the percentage of Saudi homeowners closer to its target of 70 percent.
As with rents, house prices in Saudi Arabia are low compared with other countries in the region such as the UAE and Qatar. That gap too is closing. Apartment prices in Riyadh last year rose 8 percent, for instance.
But price increases, combined with relatively high interest rates, may be squeezing some first-time buyers out of the market.
A Knight Frank poll suggests that the number of Saudis looking to buy homes has slipped. Just 29 percent of Saudi renters polled were hoping to buy in 2025, compared with 40 percent the previous year and 84 percent the year before that, the agency found.
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