Neither Dubai nor Riyadh: This is the Middle Eastern city where house prices are rising the most

Saudi Arabia’s real estate map is changing. While Riyadh remains the largest market by volume and value, the city of Dammam, a coastal city facing Iran, has taken the lead in growth. In the third quarter of 2025, it recorded around 3,000 transactions worth nearly €800 million, a 60 percent increase year over year and a 37 percent rise compared with the previous quarter.

At the same time, Riyadh closed 13,000 transactions totaling close to €4.4 billion, with a 19 percent quarterly increase but a 44 percent decline year over year. This reflects mounting affordability pressures in the capital, according to real estate firm Cavendish Maxwell.

Dammam’s “affordable value”

Dammam is attracting demand thanks to its combination of price and quality, along with more moderate rent levels. Apartment prices rose 5.8 percent year over year and villa prices increased 3.2 percent, while rents advanced 4.8 percent for apartments and 2.2 percent for villas.

This profile allows end users and investors to find entry opportunities at a point in the cycle when Riyadh and Jeddah are more expensive. In addition, Dammam’s transaction volume reflects more sustainable growth compared with the sharp peaks seen in the capital, reinforcing its narrative as the Kingdom’s new real estate hot spot.

For Saudi Arabia, diversifying urban hubs helps avoid overconcentration in the capital and encourages investment to spread into the Eastern Province, including Dammam, Dhahran, and Khobar. This region combines logistics, energy, and advanced services with a residential market that is gaining depth as demand rises.

Riyadh: leadership by size, constrained by affordability

Riyadh retains its dominance in value and continues to expand its housing supply and infrastructure in line with Vision 2030. However, it faces a significant challenge. Prices and rents have risen faster than average urban incomes. Rents increased by 11.8 percent for apartments and 10.7 percent for villas, prompting the government to impose a five-year rent freeze to ease pressure and prevent short term bubbles.

This rent control measure is likely to slow price acceleration in Riyadh, but it may also shift investment toward secondary markets with stronger net yields, where housing is less constrained by land prices and intense competition among developers. Thanks to its price to rent relationship, Dammam stands to benefit directly from this rebalancing.

A mixed market

Across Riyadh, Jeddah, and Dammam, nearly 13,500 housing units were added in the first nine months of 2025, with a target of 22,800 units by year end. Over the next two years, Riyadh aims to deliver 57,000 units, Jeddah around 36,000, and Dammam approximately 12,000. This phased rollout suggests a gradual improvement in the balance between supply and demand as new homes come to market.

Welcoming foreign buyers: the White Land Tax

At the same time, the opening of property ownership to foreigners, starting in January 2026, and the implementation of the White Land Tax, which targets idle land, could act as catalysts for activity and urban densification. The first measure will broaden the investor base, while the second will put pressure on owners to develop underused plots, particularly in cities with significant land reserves.

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