Warnings about the impact of declining land prices
Majed Al-Arabi Al-Harithi, Chairman of the Board of Directors of the Cooperative Society for Real Estate Brokers in Saudi Arabia, warned that the noticeable decline in raw land prices within the real estate market could lead to significant repercussions for the sector in the coming period.
He explained that the continued decline in land prices by rates that may exceed 50% in some cases, especially when purchasing raw land at low prices, could create a state of imbalance in the market and increase challenges related to the pricing structure and supply and demand in the real estate sector.
He indicated that this price change may not be just a natural market movement, but could represent a deeper shift in the overall dynamics of the real estate sector, requiring close monitoring of its developments.
Distortion in pricing equation within the real estate market
During his participation in the “Square Meter” podcast, produced in partnership between Asharq Business with Bloomberg and Al-Eqtisadiah newspaper, Al-Arabi pointed to what he described as a “distortion in the pricing equation” within the real estate sector.
He explained that the fair value in any real estate project should be primarily linked to construction costs, rather than the land accounting for the largest share of the final product value, as it may in some cases reach about 90% of the total price.
He confirmed that this imbalance in value distribution between land and construction could put pressure on real estate developers and affect the market’s ability to achieve sustainable price balance.
Potential effects on real estate market stability
The Chairman of the Cooperative Society for Real Estate Brokers stated that the current changes in land prices reflect fundamental transformations taking place in the real estate sector in the Kingdom, which requires re-evaluating some prevailing economic concepts.
He added that the continuation of these transformations without intervention may lead to impacts on market stability, both in terms of investment and the ability of real estate projects to maintain their economic viability.
He also pointed out that the real estate market needs clear policies that ensure balance between land cost and development cost, in a way that achieves sustainable growth and limits sharp price fluctuations.
Call to review real estate concepts
Al-Arabi emphasized the importance of re-examining several foundations and concepts adopted within the real estate sector, particularly those related to land valuation and determining its market value.
He stressed that the current phase requires developing more precise real estate market analysis tools, which would help in understanding ongoing changes and avoiding potential negative impacts in the long term.
He noted that enhancing transparency and developing pricing mechanisms would contribute to improving the attractiveness of the real estate market for both local and foreign investment.
Implications for the future of real estate investment
He pointed out that changes in land prices may affect the decisions of investors and real estate developers, whether in terms of selecting project locations or evaluating their economic feasibility.
He explained that the real estate market in Saudi Arabia is going through a gradual restructuring phase, making it necessary to handle these transformations carefully to ensure continued balanced and sustainable growth.
He also confirmed that having a clear vision for managing these changes will contribute to strengthening investor confidence and supporting sector stability in the coming years.
United News Network – UNN Arabic
An independent media platform providing reliable news and objective analysis, aiming to promote peace and cultural dialogue around the world, conveying the truth and building bridges of understanding between peoples.
For more news, you can visit our homepage:
https://un-news.org
Author: Consultant Faisal Al-Mutairi.
Publication date: 18 May 2026.
Update date:
