Saudi Arabia freezes Riyadh rents for five years to control soaring housing costs

Saudi Arabian Crown Prince Mohammed bin Salman has ordered a five-year freeze on rents in the capital, Riyadh, to curb rapidly rising real estate costs.

According to the Financial Times, citing Saudi press, the new rules, which took effect yesterday, stipulate that the rental price of vacant properties will be fixed at the last applied rate.

In a speech to the Shura Council this month, the Prince described the recent increases as “unacceptable.” He pledged to pursue policies that would stabilize price hikes, reduce costs, encourage real estate development, and offer various housing options to citizens and investors.

As part of the Crown Prince’s ambitious economic diversification program, Riyadh aims to become one of the world’s top 10 city economies. However, this vision is causing a rapid rise in property prices in the capital, which complicates the plan to increase the homeownership rate to 70% by 2030.

Faisal Durrani, Head of Research for the Middle East and North Africa at Knight Frank, said, “Rents have increased by 30-40% in the last two to three years.” Durrani emphasized that the increase was due to the migration of approximately 250,000 Saudi citizens to the capital in the last five years and a rapid increase in the number of foreigners during the same period.

According to Durrani, the rate of increase in the more exclusive northern districts reached as high as 50-60% during the same period.

The government is working to tighten regulations on vacant lands to address the supply shortage. According to regulations announced last month, the annual tax rate on vacant plots larger than 5,000 square meters in some parts of Riyadh will be quadrupled.

Officials are currently undertaking major projects in the capital, such as a national park and an entertainment district that includes a Formula 1 track. Additionally, there are plans to expand Riyadh’s airport ahead of major international events like the 2030 Expo and the 2034 FIFA World Cup.