The Saudi Arabian real estate market experienced a significant contraction in May 2026, with the total value of transactions falling by 77% to 22.6 billion riyals compared to 96.5 billion riyals during the same month in 2025. Data released by the General Real Estate Authority indicates this decline was driven by a 63% drop in residential transaction values and an 85% decrease in non-residential activity.
Why is the Saudi real estate market declining?
The total value of real estate transactions dropped from 96.49 billion riyals in May 2025 to 22.61 billion riyals in May 2026. This downturn is broad-based, affecting both the residential and non-residential sectors. According to the General Real Estate Authority, residential transactions—which make up 62.5% of the market—fell to 14.14 billion riyals, while non-residential transactions plummeted to 8.47 billion riyals.
How does the transaction volume compare to previous years?
Beyond the drop in total value, the actual number of deals is also shrinking. The market recorded 18,944 transactions in May 2026, a 33% decline from the 28,417 deals reported in May 2025. Residential deals fell by 34%, while non-residential transaction volume dropped by 30%. This suggests that the decline is not merely a result of lower property prices, but a reduction in overall market activity across the Kingdom.
Did You Know? The Riyadh region currently serves as the primary hub for real estate liquidity, accounting for 49% of the total value of transactions and 28% of the total volume of deals conducted across Saudi Arabia in May 2026.
What could happen next in the real estate sector?
While the investment market faces a sharp downturn, the leasing sector shows a more complex pattern. The total value of rental transactions saw a marginal 1% year-over-year decline to 6.12 billion riyals, largely because a 71% drop in residential rental values was nearly offset by an 85% surge in non-residential rental values. As rental contract volume grew by 11% to 300,393 contracts in May 2026, it is possible that market participants are shifting capital toward commercial leasing while remaining cautious about residential and commercial property acquisitions.
Expert Insight: The divergence between falling sales and rising rental activity suggests a significant shift in market behavior. Investors appear to be prioritizing liquidity and recurring rental income over asset ownership, particularly as non-residential rental activity remains a strong anchor for the market despite the broader slump in property sales.
Frequently Asked Questions
Which sector saw the largest decline in value?
The non-residential sector recorded the largest decline, with transaction values falling by 85% to 8.47 billion riyals compared to 57.8 billion riyals in May 2025.
How did residential property types perform?
All residential property types saw a decrease in value, with villas recording the sharpest drop at 76%. Land transactions remained the most significant component, accounting for 53% of the total residential value.
Which regions are most active in the rental market?
The Riyadh region leads both in value and volume, capturing 41% of the total rental transaction value and 32% of the total number of rental transactions in the Kingdom.
How might the continued shift toward commercial leasing impact housing affordability in major urban centers?
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