RIYADH: The UAE’s gross domestic product reached 430 billion dirhams ($117 billion) in the first quarter of 2024, marking a 3.4 percent year-on-year growth.

Economy Minister Abdulla Al-Marri highlighted that the preliminary estimates from the Federal Competitiveness and Statistics Center emphasize the vitality of the UAE economy and its ability to sustain growth, as reported by Emirates News Agency, also known as WAM.

The non-oil sector played a significant role in this expansion, with a 4 percent increase contributing substantially to the overall economic performance.

Al-Marri attributed this success to the UAE’s adoption of an innovative economic model, guided by the nation’s leadership. “The UAE has embraced an innovative economic model that aligns with its future vision, supported by effective national strategies, global openness, and a focus on flexibility and innovation,” Al-Marri stated, according to WAM.

These results align with the UAE’s long-term vision, We the UAE 2031, which aims to elevate the national GDP to 3 trillion dirhams within the next decade. This commitment to sustainable growth is reflected in the performance of key sectors such as finance, transportation, construction, and tourism.

Hanan Ahli, managing director of the Federal Competitiveness and Statistics Center, noted the substantial contributions of these sectors. “The financial and economic data from Q1 2024 demonstrate the resilience of the UAE’s vital economic sectors,” Ahli said. She added that the UAE’s strong global economic competitiveness is supported by a stable financial system, robust economic fundamentals, and effective policy frameworks.

In the first quarter of 2024, financial and insurance activities emerged as the leading non-oil sector, growing by 7.9 percent, fueled by a 6 percent rise in local credit extended to the private sector. The transportation and storage sector also showed impressive growth, with a 7.3 percent increase, supported by a 14.7 percent rise in passenger traffic through UAE airports, which saw 36.5 million travelers. Additionally, Dubai’s international ports handled 3.7 percent more containers, while Abu Dhabi’s ports experienced a 36 percent increase in cargo volume.

Construction and building activities grew by 6.2 percent, largely due to increased public capital expenditures, totaling 4.8 billion dirhams in the first quarter, compared to the previous year. The restaurant and hotel sector expanded by 4.6 percent, bolstered by an 11 percent rise in international tourists visiting Dubai, which welcomed 5.18 million visitors. Abu Dhabi also experienced strong tourism performance, with increases in hotel occupancy rates and revenue per available room.

In terms of non-oil GDP contributions, trade activities led with a 16.1 percent share, followed by manufacturing at 14.6 percent, and financial and insurance activities at 13.4 percent. Construction and real estate activities contributed 11.8 percent and 7.1 percent, respectively.

RIYADH: Saudi banks granted SR7.07 billion ($1.9 billion) in new residential mortgage loans in July, marking a 33 percent increase from the previous month, according to recent data.  

Figures from the Saudi Central Bank, also known as SAMA, showed that the number of loan contracts surged to 9,605, up from 7,274 in the previous month. 

These residential loans are primarily used for purchasing houses, apartments, and land. The majority — 62 percent, or SR4.38 billion — was allocated for house purchases. While loans for houses rose by 28 percent month on month, their share of the residential mortgage market dropped from 72 percent a year ago to 62 percent.    

Meanwhile, loans for apartments have been gaining traction, reaching SR2.26 billion in July— a 40 percent monthly growth. Their share has risen from 23 percent to 32 percent over the past year. 

Loans for land purchases, while representing the smallest portion at 6 percent, saw the highest monthly growth rate, surging 63 percent to SR429 million.  

The shift toward apartment lending reflects changing economic and demographic trends in Saudi Arabia.  

While villas remain a symbol of aspiration, the practicalities of affordability are steering more buyers toward apartments, particularly in cities like Riyadh, where property prices are steadily increasing. 

The rising cost of borrowing has eroded purchasing power, making apartments a more viable option for many. Riyadh’s projected population growth, expected to reach between 15 million and 20 million by 2030, further fuels this demand, particularly for smaller, more affordable homes and rental units. 

Additionally, the influx of both local migrants and expatriates into the capital is creating a diverse housing market where apartments are increasingly sought after, driving up their share of new residential loans. 

According to a 2024 study by Knight Frank, Saudi Arabia’s residential property market has experienced notable price growth over the past three years, with apartment prices in Riyadh reaching SR5,150 per sq. meter and villa prices hitting SR4,900 per sq. meter. 

This represents a 26 percent and 21 percent increase from the last peak in 2016, respectively according to the study. 

The surge in property prices is largely driven by the government’s ambitious Vision 2030 goal to increase homeownership from over 60 percent to 70 percent. This has been supported by various mortgage programs aimed at facilitating the transition from renting to owning. 

By the end of 2023, homeownership in the Kingdom rose to 63.74 percent, exceeding the government’s target. The new Premium Residency Visa option has further expanded the market to international buyers, contributing to the increased demand. 

An August report by Knight Frank revealed a 38 percent increase in real estate transactions in the first half of 2024, totaling 106,700 deals valued at SR127.3 billion. Residential transactions, comprising 61 percent of the total, saw a 41 percent increase in volume and a 48 percent increase in value, reaching SR77.6 billion. 

This growth is attributed to government initiatives, such as the Housing Program, which supported over 96,000 families with affordable financing, and the Development Housing Program, assisting more than 20,000 households. 

The former, which was launched in 2018, seeks to enable and facilitate Saudi homeownership by providing a range of residential and financing options and reducing waiting lists for various segments of society throughout the Kingdom. 

According to Knight Frank, Riyadh saw the highest increase in residential transactions at 49 percent, outpacing other major cities. 

Initiatives such as the regional headquarters program are driving residential demand, as an increasing number of businesses expand and relocate their bases to the capital. 

This influx of corporate activity not only boosts the local economy but also intensifies the need for housing, attracting both domestic and international interest in the city’s real estate market.