Off-plan paints a brighter picture for Saudi real estate sector, reveals report

According to a new report, Saudi Arabia’s housing market is on the cusp of a transformative leap, fuelled by a dynamic approach: off-plan sales.

This model, highlighted in PwC’s Saudi Arabia’s off-plan market: A driving force fueling a vibrant and sustainable society report, promises not just homes, but a vibrant and sustainable society targeted by the kingdom’s Vision 2030.

“Since its launch in 2016,” says Imad Shahrouri, Housing and Real Estate Cluster leader at PwC Middle East, “off-plan sales have become a game-changer. It fast-tracks homeownership, empowers developers, and fosters a collaborative ecosystem.”

Bridging the gap between a national homeownership target of 70 per cent and the current 47 per cent, off-plan sales offer affordability and accessibility, making the dream of owning a home a reality for a new generation of Saudis. This isn’t just about bricks and mortar; it’s about boosting the GDP, stimulating the banking sector, and creating a ripple effect across industries like real estate brokerage and construction.

Recent years have seen a surge in off-plan property sales in the kingdom, recording 52 per cent growth in H1 2023, compared to the same period in 2022.

The kingdom’s real estate market has now made it a feasible possibility for a new generation of Saudis to own their property.

In tandem with considerable changes made to the local real estate market, including developing comprehensive and clear regulations, cultivating stronger partnerships between public and private sector players and empowering developers, the kingdom can bridge the gap between supply and demand for residential housing.

However, the off-plan sales in the country are relatively new, and obstacles such as a lack of clear regulations, insufficient awareness, and trust issues are roadblocks that need strategic solutions.

Read: How Saudi Arabia is resetting its real estate landscape brick by brick

The report recommends the following strategy to drive off-plan sales.

Shifting sands of perception: Changing mindsets is key. Effective marketing highlighting the benefits of off-plan purchases can bridge the gap between tangibility and future possibilities. Competitive pricing strategies will further sweeten the deal.

Location, location, location: Accessibility is paramount. Developers must prioritise proximity to amenities, transportation hubs, and essential services to make off-plan projects desirable.

Navigating the financial currents: Rising interest rates necessitate innovative financing solutions. Balancing liquidity and meeting project demands requires a collaborative approach from banks and developers.

Developer ecosystem a must: Saudi Arabia needs a robust developer ecosystem. Attracting experienced regional players and nurturing local talent are crucial steps to bridging the skill gap.

Assurance to attract investment: Robust quality assurance mechanisms are essential. Addressing construction delays, ensuring timely project completion, and delivering on promises will bolster buyer confidence and attract further investment.

Vision realised: Overcoming these challenges through strategic interventions will unlock the boundless potential of off-plan sales. Not just a market tool, it’s a catalyst for achieving Vision 2030 goals and building a vibrant, collaborative real estate landscape in Saudi Arabia.

As the sands shift, one thing remains constant: the promise of homeownership for millions. With a clear vision, innovative solutions, and a collaborative spirit, the kingdom is poised to create a real estate revolution, brick by brick.