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RIYADH: ������Ƶ’s real estate market maintained its steady growth in the second quarter of the year, with overall property prices in the Kingdom witnessing a 3.2 percent year-on-year rise, official data showed. 

Commercial real estate prices recorded an annual increase of 11.7 percent in the second quarter, while expenses for residential properties saw a marginal rise of 0.4 percent, according to the latest report by the Kingdom’s General Authority for Statistics. 

Strengthening the real estate sector is one of the crucial goals outlined in ������Ƶ’s Vision 2030 agenda, as the country continues to diversify its economy away from oil and position itself as a global business and tourist destination. 

The Real Estate General Authority expects the property market to reach $101.62 billion by 2029, with an anticipated compound annual growth rate of 8 percent from 2024.

“Data indicates that commercial real estate prices recorded an annual increase of 11.7 percent in the second quarter of 2025, compared to the same quarter of the previous year. The sector accounts for 25.4 percent of the index,” said GASTAT. 

“This increase is associated with a 12.7 percent rise in commercial land plot prices, which represent 22.8 percent of the index,” it added. 

Commercial building prices witnessed a year-on-year rise of 2.7 percent in the second quarter, while shop and gallery prices rose by 4.1 percent, the authority said. 

In June, global real estate consultancy Knight Frank also underscored the growth of ������Ƶ’s commercial real estate sector. It said rents for Grade A office spaces in Riyadh reached SR2,700 ($719.95) per sq. meter by the end of the first quarter, representing a rise of 23 percent compared to the same period in 2024. 

Knight Frank added that government-led initiatives, including the regional headquarters program, are driving the expansion of the commercial real estate sector in the Kingdom. 

������Ƶ’s regional headquarters program offers benefits to international firms, including a 30-year exemption from corporate income tax, a waiver of withholding tax on headquarters activities, and discounts and support services.

GASTAT said residential land prices recorded an annual growth rate of 0.2 percent, while villa and residential floor prices rose by 3.2 percent and 1.5 percent, respectively. 

Apartment prices decreased by 0.7 percent in the second quarter, compared to the same period in the previous year. 

Quarterly comparison

According to GASTAT, ������Ƶ’s real estate price index increased by 0.1 percent in the second quarter, compared to the previous three months. 

The authority said the growth was driven by a 7.9 percent rise in commercial real estate prices, including an 8.6 percent increase in commercial land plot prices and a 3 percent rise in building prices.

Agricultural sector prices increased by 1.7 percent quarter on quarter, in line with a 1.7 percent rise in agricultural land prices.

The annual rate of change of the real estate price index slowed in the second quarter of this year compared to the first quarter, due to slower growth in the residential sector. 

“The real estate price index in ������Ƶ recorded an annual rate of change of 3.2 percent in the second quarter of 2025, compared to 4.3 percent in the first quarter of the same year. This change is associated with slower growth in the residential sector, which has the highest relative weight in the index,” said the authority. 

The report added that residential real estate prices declined by 2.6 percent in the second quarter compared to the previous three months. 

GASTAT said residential land prices decreased by 4 percent, while expenses for apartments and residential floors dropped by 1.2 percent and 0.9 percent, respectively. 

Villa prices rose by 1.8 percent in the second quarter compared to the first quarter. 

In April, a report released by S&P Global said ������Ƶ’s retail real estate market is poised to increase in the near term, driven by population growth, expanding tourism, and economic diversification efforts under the Vision 2030 initiative. 

The credit rating agency added that ongoing mega-projects and the expansion of international brands are expected to propel further demand for retail space across the Kingdom.

Regional trends

GASTAT said overall real estate prices in the Eastern Province region witnessed an annual increase of 4.2 percent in the second quarter, followed by the Makkah region at 3.9 percent, and the Riyadh region at 3.6 percent. 

In the first quarter, the Riyadh region recorded a higher annual rate of change of 10.7 percent, in terms of real estate prices. 

“Tabuk, Hail, and Qassim regions recorded increases of 4.7 percent, 2.9 percent, and 1.1 percent, respectively. In contrast, Asir, Madinah, and Jazan regions recorded decreases of 3.9 percent, 3.2 percent, and 2.8 percent, respectively,” GASTAT said. 

JEDDAH: A year after marking its 50th anniversary, the Islamic Development Bank remains at the forefront of global development finance, recognized for its distinctive model that blends Shariah finance principles with strategic investments.

Established in August 1974 and commencing operations in October the following year in ������Ƶ, the IsDB has grown into a distinctive institution within the global development landscape, championing ethics, equity, and solidarity among its 57 member countries and impacting one in five people worldwide.

The bank was founded through a visionary initiative led by Saudi King Faisal bin Abdulaziz and other Islamic leaders to foster development cooperation among member states of the Organization of Islamic Cooperation and enhance the wellbeing of Muslim communities.

Financial strength

The IsDB is recognized as one of the world’s most active multilateral development banks and a global leader in Islamic finance. It boasts prestigious AAA credit ratings by Moody’s, S&P, and Fitch — reflecting its strong financial stability and low risk.

With a subscribed capital of $76 billion, the bank is well-positioned to support large-scale development projects and foster economic growth across its member countries.

The Jeddah-based organization has evolved into a group of five institutions representing member states across four continents, with total approvals exceeding $182 billion for more than 12,000 development projects, as of April 2024.

Built on strong partnerships and trusted governance, the bank continues to promote sustainable socioeconomic development. ������Ƶ’s enduring support remains crucial as the IsDB charts its strategic future, committed to tackling today’s challenges and strengthening solidarity throughout the Muslim world.

Among its strongest partnerships is with Turkiye, a founding member that has received nearly $13 billion in IsDB approvals across 545 projects. In April 2024, both sides launched a new $6.3 billion framework to boost sustainability, productivity, Islamic finance, and digital transformation, reaffirming the bank’s long-term commitment to Turkiye’s development.

Speaking to Arab News, Abdulmohsen Al-Alshiekh, assistant professor and board member of the Saudi Economic Association, said over the past five decades, the IsDB has played a critical role as a development catalyst across the Islamic world.

He added that its effectiveness can be assessed on several fronts, including Infrastructure development, human capital investment, Shariah-compliant financing, crisis response, and South-South cooperation.

“IsDB has financed thousands of projects in transport, energy, water, and urban development, significantly improving connectivity and public services across its member countries,” Al-Alshiekh said.

He added that through scholarship programs, capacity-building initiatives, and education sector support, IsDB has contributed to advancing education, vocational training, and knowledge economies in low- and middle-income member states.

As for the bank’s Islamic law financing compliance, Al-Alshiekh said that one of IsDB’s unique strengths is its adherence to Islamic finance principles. “By promoting risk-sharing and asset-backed investments, it has provided an alternative to interest-based lending and contributed to the growth of the Islamic finance industry globally,” he added.

Crisis response

Al-Alshiekh said the bank has shown agility in responding to global crises, including the COVID-19 pandemic, by mobilizing special funds, providing concessional financing, and supporting resilience and recovery efforts in vulnerable member countries.

He added that the bank continues to foster cooperation among member states through trade finance, investment insurance, and technology transfer initiatives, reinforcing its role as a key platform for intra-OIC economic collaboration.

Development reach

Al-Alshiekh noted that countries across sub-Saharan Africa, the MENA region, South Asia, and Southeast Asia have benefited from IsDB’s interventions, underscoring several priority sectors including infrastructure, education, health, agriculture, and trade.

“These investments have helped close infrastructure gaps and improve regional integration, especially in landlocked and low-income countries,” he added.

On education and health, the assistant professor said the IsDB has funded scholarships, technical training, hospitals, and pandemic response. It has also supported irrigation, rural development, and agribusiness in sub-Saharan Africa and South Asia to fight poverty and boost food security.

“Countries such as Senegal, Niger, Nigeria, and Sudan have received substantial support in infrastructure, agriculture, and education,” he said.

Countries recovering from conflict or facing economic challenges, such as Yemen, Egypt, Morocco, and Tunisia, have received significant assistance, while Bangladesh, Pakistan, Indonesia, and the Maldives have also benefited from a mix of infrastructure, health, and education investments, Al-Alshiekh added.

Unequal model

Unlike conventional multilateral development banks, all the bank’s financial transactions comply with Islamic principles.

“One of IsDB’s unique strengths is its adherence to Islamic finance principles,” Alalshiekh said “By promoting risk-sharing and asset-backed investments, it has provided an alternative to interest-based lending and contributed to the growth of the Islamic finance industry globally.”

Youssef Saidi, a research fellow at the Economic Research Forum, emphasized the importance of distinguishing the IsDB’s model from that of conventional multilateral development banks.

“To understand the unique contributions of the IsDB, it is essential to examine how its development model contrasts with those of the conventional multilateral development banks, which often focus on standardized approaches that may not fully address the unique needs of developing countries, potentially limiting their effectiveness in fostering sustainable growth,” Saidi told Arab News.

He added that the IsDB focuses on Islamic finance principles, socio-economic development, and innovative approaches to financing and project implementation.

“These characteristics emphasize the importance of adaptability and responsiveness to the specific needs of member countries, which is essential for effective development financing,” he said.

He noted that this adaptability allows the IsDB to forge partnerships that boost funding and enhance project delivery, similar to other multilateral development banks.

Future priorities

As the global development landscape becomes increasingly complex, both Saidi and Al-Alshiekh agree that the IsDB must recalibrate its strategic focus to address emerging challenges.

“The challenges facing the IsDB include addressing governance issues, ensuring effective resource allocation, and adapting to the evolving needs of its member countries to enhance development outcomes,” Saidi said.

To maintain its relevance, the IsDB must navigate challenges such as regional disparities in development, ensuring equitable resource allocation, and fostering innovation in Islamic finance practices, he also said.

Looking ahead, Al-Alshiekh said the IsDB is expected to broaden its role in key areas such as climate action through green sukuk, private sector partnerships focused on small and medium enterprises, fintech, digital infrastructure and e-governance, and support for fragile regions via stabilization funds and humanitarian-development-peace frameworks.

Enduring values

While the IsDB shares several features with conventional development banks, including alignment with the UN Sustainable Development Goals, it remains rooted in a distinct ethos.

“Unlike conventional MDBs, IsDB operates entirely on Islamic finance principles. This means it avoids interest-bearing loans and instead uses instruments like Murabaha, or cost-plus sale, ijara, or leasing, and istisna’a, or construction financing, as well as sukuk,” Al-Alshiekh explained.

He added that the IsDB’s approach is value-based, emphasizing ethical finance, social justice, and equitable growth that aligns with Islamic principles. “This contrasts with the often secular and market-oriented frameworks of conventional MDBs.”

Governance is another differentiator. “IsDB’s governance model is rooted in the OIC (Organization of Islamic Cooperation), with its members being exclusively Islamic countries,” he said.

This allows for a greater cultural and strategic alignment among its stakeholders, while conventional MDBs tend to have a broader, more diverse global membership, he noted.

Al-Alshiekh also underlined the principle of solidarity that guides the bank’s resource allocation. 

“The IsDB emphasizes ‘Islamic solidarity’, often prioritizing needs-based resource allocation and South-South cooperation, in contrast to performance-based lending criteria or conditionalities common in conventional MDBs,” he said.