Key Takeaways
- • Saudi Arabia is preparing to implement large-scale foreign ownership in real estate, a major policy shift expected to reshape market dynamics in 2026, though implementation details remain unclear and are creating market uncertainty.
- • The kingdom is simultaneously attempting to cool housing prices in Riyadh through amendments to the white land tax, designed to spur construction and reduce buyer costs, but landowners and buyers are currently in a "Mexican stand-off" over pricing.
- • Real estate consultants expect a minimum of three months into 2026 before white land tax changes stabilize land prices and their full market impact becomes visible, according to Taimur Khan, head of research MENA at JLL.
- • Pressure on contractors from ongoing developments is pushing up construction costs at a time when the Public Investment Fund ($930 billion) may reduce funding for large infrastructure projects, potentially freeing up market supply.
- • The Saudi real estate market size was valued at USD 77.2 billion in 2025 and is projected to reach USD 141.6 billion by 2034 at a compound annual growth rate of 6.73% from 2026-2034.
Summary
Saudi Arabia's real estate market stands at an inflection point as the kingdom implements transformative policy changes expected to reshape investment patterns and pricing dynamics throughout 2026. Real estate consultants are tentatively forecasting increased market activity in the new year, driven by multiple policy decisions whose precise effects remain uncertain. The most significant development is the preparation for large-scale foreign ownership, a policy shift that has long been restricted but is now imminent. Simultaneously, the government is attempting to counteract rising housing prices in Riyadh, the country's largest real estate market, creating competing market forces that complicate predictions.
The white land tax amendment represents a central policy lever intended to accelerate construction activity and reduce buyer costs. This tax, which has previously pushed up costs for landowners holding vacant or underdeveloped sites, is being modified to incentivize development. However, the policy's practical effects are creating friction in the market. Landowners and buyers are currently locked in negotiations over pricing adjustments following the tax changes, described as a "Mexican stand-off" by market participants. According to Taimur Khan, head of research MENA at JLL, stabilization of land prices and visible market impact from these regulatory changes will likely require a minimum of three months into 2026 to materialize fully.
Concurrent pressures are affecting construction economics. Ongoing developments are placing upward pressure on contractors, increasing construction costs during a period when state and Public Investment Fund infrastructure funding may contract. This reduction in public-sector infrastructure spending could free up supply in the private real estate market. The convergence of these factors—foreign ownership reforms, tax policy changes, construction cost pressures, and potential shifts in public funding—creates a market environment that industry insiders acknowledge is difficult to predict with accuracy. The kingdom's regulatory environment remains in flux, with clarification still pending on foreign ownership implementation procedures. Market participants are focused on monitoring how these regulations ultimately play out over the coming quarters.
The white land tax amendment represents a central policy lever intended to accelerate construction activity and reduce buyer costs. This tax, which has previously pushed up costs for landowners holding vacant or underdeveloped sites, is being modified to incentivize development. However, the policy's practical effects are creating friction in the market. Landowners and buyers are currently locked in negotiations over pricing adjustments following the tax changes, described as a "Mexican stand-off" by market participants. According to Taimur Khan, head of research MENA at JLL, stabilization of land prices and visible market impact from these regulatory changes will likely require a minimum of three months into 2026 to materialize fully.
Concurrent pressures are affecting construction economics. Ongoing developments are placing upward pressure on contractors, increasing construction costs during a period when state and Public Investment Fund infrastructure funding may contract. This reduction in public-sector infrastructure spending could free up supply in the private real estate market. The convergence of these factors—foreign ownership reforms, tax policy changes, construction cost pressures, and potential shifts in public funding—creates a market environment that industry insiders acknowledge is difficult to predict with accuracy. The kingdom's regulatory environment remains in flux, with clarification still pending on foreign ownership implementation procedures. Market participants are focused on monitoring how these regulations ultimately play out over the coming quarters.
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