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

Saudi Arabia is at an inflection point. Helmed by a young leadership, with an astute focus on key industries and initiatives, the kingdom is leaving no stone unturned to help curate a diverse and integrated future, as well as position itself as a global hub.

Saudi Arabia’s vision for the next decade not only includes a roadmap and a timeframe for its economic transformation but also the depth of its recalibration. Among prime industries that form part of the country’s bailiwick, is real estate. Mega projects, sprawling hotels, smart cities, regenerative plans and a strong will from the leadership are helping redefine living for local residents and positioning the country as a top tourism destination.

Prime among the real estate spectrum is residential development, which is a focal point for the country and has secured a spot in its Vision 2030. At the forefront of this campaign is the National Housing Company (NHC), a Riyadh-headquartered real estate development giant, which seeks to provide a gamut of affordable housing options via urban communities to meet the aspirations of the current and future generations. Operating as the investment arm of Saudi Arabia’s Ministry of Municipal, Rural Affairs and Housing, the company has contributed to the advancement of the country’s real estate sector by increasing housing supply, enhancing capabilities of property developers and service providers, and providing investment options to owners.

“We play an active role in stimulating the housing and real estate system and achieving a balance with the rest of the sectors, notably to attain the goals of the housing programme and overall vision,” explains Mohammed Bin Saleh Albuty, NHC’s chief executive officer.

The National Housing Company operates with three subsidiaries, covering the service spectrum of the real estate industry – the National Housing Services Company provides housing services; the National Asset Management Company supports asset management and facilities; and the National Financing Services Company operates as a central platform for managing finance for the Saudi Real Estate Refinance Company, which facilitates access to sustainable financing solutions for homebuyers in the country.

More notably, NHC has been pivotal in bolstering the manufacturing and use of local materials in partnership with the private sector stakeholders, including real estate developers, contracting companies, materials supply companies, and others.

“The percentage of local materials exceeds 90 per cent of the products used in project development. Currently, we have over 163 projects under construction, alongside more than 160 developers and real estate contractors. This will lead to an addition of more than 123,000 housing units, with value exceeding SAR96bn across 19 cities. Over 14,000 units have already been delivered to customers,” adds Albuty.

Broader view

Saudi Arabia has launched several initiatives to revamp its residential real estate landscape. In 2018, the kingdom launched the housing programme to enable Saudi families to own suitable housing, thus enhancing their living conditions, increasing inventory, developing local content and creating additional employment opportunities.

According to The Housing Program Delivery Plan (2021-2025), the programme’s first phase (2018-2020) revamped the governance, delivery and financial mechanisms of the residential housing sector. Expanding access to finances, improving sector regulations, introducing technologies and practices, and increasing housing unit delivery drew success with home ownership rising considerably. The programme’s 2025 Strategy evolves its strategic focus ‘from rapidly accelerating ownership to steadily improving market affordability, sector maturity and housing access,’ the plan stated.

The collective efforts have led to an increase in demand for home ownership. “One of [the housing programme’s] most prominent goals was to raise the percentage of home ownership from 47 per cent before its launch to 62 per cent by 2022. This is what happened during the current year as a result of integration between all relevant parties under the programme, with NHC playing a pivotal role,” notes Albuty.

The National Housing Company has also inked several partnerships with stakeholders for joint collaboration to advance the sector. It recently penned a pact worth over $10bn with the Ministry of Municipal, Rural Affairs and Housing to develop infrastructure across multiple cities. “The agreement aims to provide more than 150,000 housing units of varying sizes and designs, covering 11 cities across Saudi Arabia, on an area of more than 90 million square metres. Of this, approximately 54 million square metres will be allocated to green and open spaces, public utilities, road networks and public transport,” says Albuty.

NHC also signed a Memorandum of Understanding (MoU) with Diriyah Gate Development Authority (DGDA) earlier this year to bolster integration between the two entities and offer additional design options to NHC clients within the authority’s jurisdiction.

The company has also unveiled several projects in the Al-Madinah province. “National Housing Company continues to develop the real estate sector in Al-Madinah Province, where we recently launched the largest housing projects, suppling over 20,000 housing units spread over an area of more than 9.7 million square metres to accommodate in excess of 100,000 people, across the communities of Al-Mukaiman, Al-Ghoroub, the suburb of Al-Dar and the community of Loulou’a Home,” explains Albuty.

“We also signed ten agreements worth over SAR9bn to develop the Al-Mukaiman community and the suburb of Al Dar. This will be followed by an investment of over SAR8bn in the sunset community and new projects,” he adds.

But offering housing options isn’t the only mandate for the real estate giant. It ultimately aims to raise the standard of living for people across the country and is targeting that goal through its projects. “NHC has applied quality-of-life standards across all its projects, to achieve sustainability and wellbeing for its beneficiaries,” notes Albuty. “In NHC, we adopt the modern lifestyle [concept] that aims to achieve the global trend to humanise cities, improve the urban landscape, and create integrated residential suburbs in which residents do not depend on car traffic alone, but have access to daily basic services and facilities in less than five minutes on foot, and to central services and entertainment within a space of 10 minutes,” says Albuty.

“Additionally, we have adopted a set of governing rules in our projects, such as diversifying modern designs and increasing green spaces so that the urban community is a healthy place committed to environmental principles,” adds Albuty.

Moving ahead

With joint collaborations and massive projects, the Saudi residential real estate market is set to accelerate. The country’s population stood at 34.1 million by mid-year of 2021, of which over 57 per cent were under the age of 35. Meanwhile, Saudi nationals form a formidable consumer force, making up 63.6 per cent of the total population last year.

NHC, in line with national priorities, also aims to add to the property inventory and facilitate its growth. “Our main priorities going forward include increasing the real estate supply and readying 300,000 housing units for sale in 2025; building smart residential communities and suburbs that provide quality of life to ensure the wellbeing of residents and the sustainability of neighbourhood facilities; and contributing to raise the transparency of the real estate market and facilitating operations through initiatives and products,” shares Albuty. The kingdom is resetting its real estate landscape brick by brick. And from the looks of it, the future looks promising.