Riyadh - Mubasher: Launching a real estate price index will provide investors with one of the key inputs required while making investment decisions in the sector, Al-Rajhi Capital said in a report on Monday.

The Saudi general authority for statistics recently released a comprehensive price index for Saudi Arabia’s real estate sector calculated based on the data provided by the ministry of justice, according to the report.

The index is launched with the base year as 2014 and further classified in to three main sectors namely residential, commercial and agriculture with 65%, 31% and 4% weights respectively at the aggregate level.

After witnessing a marginal growth in 2014, the Kingdom’s real estate prices have declined for the past eight consecutive quarters due to weakness in the residential sector, mainly plots and apartments, the report noted.

In the case of commercial sector, prices dropped at the aggregate level due to sharp decline in prices of plots, whereas prices of building and commercial centres inched up during the past two years indicating continued demand for income generating commercial assets. On a regional basis, Al Baha, Riyadh and Makkah regions saw the sharpest fall in real estate prices since 2014.

Al-Rajhi Capital said that the decision to create the index supports the government’s stated objectives in Vision 2030 and the national transformation program (NTP) documents to increase the contribution of real estate sector to the overall GDP of the Kingdom going forward by attracting more private sector investments.