In a striking revelation about the state of the Saudi real estate market, experts are voicing concerns over the lack of reliable data and indicators that can accurately measure its performance. This situation hinders effective management and policy-making in a sector that is crucial for the Kingdom's economic future.
According to a recent article published by Mal Media International, the current state of the Saudi real estate market is such that it cannot be measured or studied effectively. The article cites the famous management theorist Peter Drucker, who once said, "You can't manage what you can't measure." This principle underscores the challenges faced by various stakeholders in the market.
Despite efforts by agencies to work with major foreign consulting firms, the resulting studies often fail to reflect the reality of the market and lack practical value. The article emphasizes that without accurate measurements, the market remains unmanageable, leading to confusion among investors and policymakers alike.
One of the key issues highlighted is the disparity in how the real estate market is perceived. Some investors view the market as rising due to the performance of certain plots and shares, while others believe it is declining significantly. This conflicting perspective complicates decision-making for investors who are trying to navigate the uncertainty.
Moreover, the article points out that there is a stark contrast between the Saudi financial market authority and the General Authority for Real Estate. The financial market authority has a specialized department dedicated to conducting research and studies, collaborating with universities and research centers. This department plays a vital role in developing the market, enhancing its efficiency, analyzing behaviors, and monitoring potential risks. In contrast, the General Authority for Real Estate has not published specialized research on the real estate market, nor has its comprehensive strategy addressed this critical aspect.
The absence of a dependent variable in the real estate market is seen as a primary problem. To illustrate, the article compares the situation to the Saudi stock market lacking a general index, TASI. Without this indicator, it becomes nearly impossible to determine the overall market direction accurately, leading to confusion among traders and investors.
In practical terms, the lack of a clear indicator means that even basic questions about the market's performance remain unanswered. For instance, if interest rates rose from 0.13% in 2015 to 2.16% in 2019, it would be challenging for anyone to ascertain whether the Saudi real estate market experienced an increase or decrease during that period.
In contrast, the article highlights the U.S. real estate market, where tools like the Case-Shiller Home Price Indices allow for quick assessments of housing prices. This comparison underscores the need for similar mechanisms in Saudi Arabia.
Furthermore, the article discusses the importance of establishing a clear indicator for the Saudi real estate market, which would serve as a fundamental entry point for statistical analyses, research, and decision-making based on scientific evidence. The author argues that even if efforts are made today to address this issue, it would take between 10 to 20 years to gather sufficient new data to create a meaningful sample for future studies.
Highlighting the urgency of this matter, the article mentions the directives from Crown Prince Mohammed bin Salman, which aim to enhance real estate offerings and stabilize prices in the market. These initiatives are part of the broader Vision 2030 strategy, which seeks to achieve stability and balance between supply and demand in the real estate sector.
As the Saudi real estate market grapples with these challenges, the call for immediate action to improve measurement and transparency has never been more critical. The future of this vital sector depends on the ability to accurately assess its performance and implement informed policies that will foster growth and stability.
Meanwhile, across the Atlantic, the United States is facing its own economic challenges, with a significant downturn reported in 2025. The American economy is experiencing a decline in revenues from tourism and foreign investment, with projected losses estimated at $90 billion, which is about 0.3% of the gross domestic product, according to forecasts from Goldman Sachs.
Data from the International Trade Administration reveals that the number of visitors arriving in the United States by air decreased by approximately 10% in March 2025 compared to the same month in 2024. This decline is seen as a troubling indicator of waning confidence among potential visitors regarding the U.S. as a desirable travel destination.
The confluence of these economic trends highlights the interconnectedness of global markets and the importance of robust data and indicators to navigate uncertainties. As both the Saudi and U.S. real estate markets confront their respective challenges, the need for accurate measurement and informed decision-making remains paramount.
